Question

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 1,400 direct labor-hours. The company paid these direct labor workers a total of $18,200 for this work, or $13.00 per hour. According to the standard cost card for this meal, it should require 0.30 direct labor-hours at a cost of $12.50 per hour. Required: 1. According to the standards, what direct labor cost should have been incurred to prepare 4,800 meals? How much does this differ from the actual direct labor cost? (Round labor-hours per meal and labor cost per hour to 2 decimal places.) Number of meals prepared Standard direct labor-hours per meal Total direct labor-hours allowed Standard direct labor cost per hour Total standard direct labor cost Actual cost incurred Total standard direct labor cost Total direct labor variance 2. Break down the difference computed in (1) above into a labor rate variance and a labor efficiency variance. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Labor rate variance Labor efficiency varianceſ

Answer 1

Schedule

Number of meals prepared	4800
Standard labor hour per meal	0.30
Standard labor hour allowed	1440
Cost per labor hour	12.50
Standard labor cost	18000
Actual cost incurred	18200
Standard labor cost	18000
Total labor variance-Unfavorable	200

2) Labor rate variance = (12.50*1400-18200) = 700 U

Labor efficiency variance = (1440-1400)*12.50 = 500 F