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 6,600 of these meals using 1,950 direct labor-hours. The company paid its direct labor workers a total of $27,300 for this work, or $14.00 per hour. According to the standard cost card for this meal, it should require 0.30 direct labor-hours at a cost of $13.00 per hour. Required: 1. What is the standard labor-hours allowed (SH) to prepare 6,600 meals? 2. What is the standard labor cost allowed (SH × SR) to prepare 6,600 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.)

Answer 1

			Standard Cost for a Meal:	Hours	Rate	Amt
			Direct Labor	0.30	13.00	3.90
		1	Standard time for 6600 Meals:
			Direct Labor Per Meal	0.30
			Total Meals	6600
			Standard Time for 6600 Meals	1980	Hours
		2	Standard Time for 6600 Meals	1980	Hours
			Standard Rate PH	13.00
			Standard Cost Allowed	25740
		3	Standard Cost for 6600 Meals:	Hours	Rate	Amt
			Direct Labor	1,980	13.00	25,740
			Actual Cost	Hours	Rate	Amt
			Direct Labor	1,950	14.00	27,300
			Labor Spending Variance:
			(Standard Cost-Actual Cost)
			(25740-27300)
			-1560	U
		4	Labor Rate Variance:
			(Standard Rate-Actual Rate)*Actual Hours
			(13-14)*1950
			-1950	U
			Labor Eff Variance:
			(Standard Hours-Actual Hours)*Standard Rate
			(1980-1950)*13
			390	F