SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of

Question

SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of the company's products is grilled salmon in dill sauce with baby new potatoes and spring vegetables. During the most recent week, the company prepared 4,000 of these meals using 750 direct labor-hours. The company paid its direct labor workers a total of $6,000 for this work, or $8.00 per hour According to the standard cost card for this meal, it should require 0.20 direct labor-hours at a cost of $700 per hour. Required 1. What is the standard labor-hours allowed (SH) to prepare 4,000 meals? 2, what is the standard labor cost allowed (SH × SR) to prepare 4,000 meals? 3. What is the labor spending variance? 4. What is the labor rate variance and the labor efficiency variance? For requirements 3 and 4, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do no round intermediate calculations.) 1. Standard labor-hours allowed 2.Standard labor cost allowed 3 Labor spending variance 4. Labor rate variance Labor efficiency variance

Explanation / Answer

Calculate following :

1.standard labour hour allowed (4000*.20) 800 Hours 2. Standard labour cost allowed (800*7) $5600 3. Labour rate variance = (7-8)*750 750 Unfavourable 4. Labour efficiency variance = (800-750)*7 350 Favourable 5. Labour cost variance = (5600-6000) 400 Unfavourable

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