## Question

###### Sky Chefs, Inc., prepares in-flight meals for a number of major airlines. One of the company's...

Sky Chefs, 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 4,800 of these meals using 2,350 direct labor-hours. The company paid its direct labor workers a total of $23,500 for this work, or $10.00 per hour. According to the standard cost card for this meal, it should require 0.50 direct labor-hours at a cost of $9.40 per hour. Required: 1. What is the standard labor-hours allowed (SH) to prepare 4,800 meals? 2. What is the standard labor cost allowed (SH SR) to prepare 4,800 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 Standard labor cost allowed Labor spending variance Labor rate variance Labor efficiency variance

## Answers

Ans. 1Standard direct labor hours= Actual production * Standard hours allowed per unit4,800 meals * 0.50 hours per meal 2,400 hoursAns. 2Standard labor cost allowed= Standard direct labor hours allowed * Standard rate2,400 * $9.40 $22,560Ans. 3Labor spending variance= Standard labor cost - Actual labor cost$22,560 - $23,500 -$940or $940 unfavorableAns. 4Labor rate variance = (Standard rate - Actual rate) * Actual hours($9.40 - $10) * 2,350 -$0.60 * 2,350 -$1,410or $1,410 unfavorableLabor efficiency variance = (Standard hours - Actual hours) * Standard rate(2,400 - 2,350) * $9.40 50 * $9.40 $470or $470 favorable

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