SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of the company’s products is grilled salmon with new potatoes and mixed 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?

Please find answers in the explanation column

Explanation:

a)standard labor-hours allowed (SH) to prepare 4,800 meals

standard labor-hours =Actual output X standard direct labor hours

      4,800 X  0.50 = 2,400hours

B) standard labor cost allowed

direct labor-hours per houR =  $9.40

standard labor-hours = 2,400

standard labor cost =direct labor-hours per houR xstandard labor hours

= $9.40 x 2,400=  $22,560

c) labor spending variance= Actual cost incurred - Standard Labor cost

                                         = 23,500 - 22,560= 940 -- Which is unfavorable because the actual is cost is greater than the standard labor cost

D)the labor rate variance and the labor efficiency variance?

labor rate variance= (Actual rate - standard rate ) X Actual hours

                                     ($10.00 -$9.40) X 2,350= $1,410

Labor efficiency variance=(Actual hrs - standard hrs allowed) x standard rate

      2,350- 2,400) X  $9.40= $470   --- Favourable as the actual hours used is less than the standard hours .

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