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https/ t.html aded Exercises Help Save & Exit Subs Check my werk with baby new potatoes and spring vegetables. During the 2,800 s for a number of major airlines. One of the company's products is grilled salmon in dill auce most recent week, the company prepared 7.200 of these meals using direct labor-hours. The company paid its direct labor workers a total of $22.400 for this work, or $8.00 per hour According to the standard cost card for this meal, it should require 0.40 direct labor-hours at a cost of $7.50 per hour. Required: 1. What is the standard labor-hours allowed (SH) to prepare 7.200 meals? 2. What is the standard labor cost allowed (SH x SR) to prepare 7,200 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.)

Explanation / Answer

1)company prepared meals = 7200

standard hour required to prepare a meal = 0.4 direct labour hour

so standard hour required to prepare 7200 meals = 7200*0.4= 2880 hour

2) standard labor cost allowed

standard hour required to prepare 7200 meals = 2880 hour

standard cost for 1 hour = $7.5 per hour

so standard labor cost = 2880*7.5 = $ 21600

3) labor spending variance

standard labor cost = $ 21600

actual labor cost = $ 22400

labor spending variance = 21600- 22400 = 800(unfavourable) since incurred more than standard

4) labor rate variance = actual hour ( actual rate - standard rate)

labor rate variance = 2800 (8-7.5) = 1400 (unfavourable)

labor efficiency variance = standard rate (actual hour - standard hour)

labor efficiency variance = 7.5 (2800-2880) = 600 (favourable)

conclusion: labor were efficient as they took less hour to prepare 7200 meal but since rate paid were more than budgeted hence ultimately result turned( spending ) unfavourable.

logistics solution

1)company shipped items = 140000

standard hour required to fullfill anorder peritem = 0.03 direct labour hour

so standard hour required to fullfill an order= 140000*.03 = 4200 hour

2) standard variable overhead cost allowed

standard hour required to fullfill an order = 4200 hour

standard cost for 1 hour = $3.05 per hour

so standard labor cost = 4200*3.05 = $12810

3) variable overhead spending variance

standard labor cost = $ 12810

actual labor cost = $ 15900

labor spending variance = 12810-15900 = 3090(unfavourable) since incurred more than standard

4) variable overhead rate variance = actual hour ( actual rate - standard rate)

variable overhead rate variance = 5300 (15900/5300  - 3.05) = 265 (favourable)

variable overhead efficiency variance = standard rate (actual hour - standard hour)

labor efficiency variance = 3.05 (5300-4200) = 3355 (unfavourable)

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