SkyChefs Inc prepares inflight meals for a number of major a

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 4,800 of these meals using 2,350 direct labor-hours. The company paid these 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. 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 (.e., zero variance).) Labor rate variance Labor efficiency variance

Solution

Actual Data Standard Data Total Units 4800 Total Units 4800 DLH Used 2350 DLH PU 0.50 DL Rate PH 10.00 Standard DLH 2,400 Standard DL Rate PH 9.40 1 Number of Meals Prepared 4800 A Standard DLH per Meal 0.50 B Total DLH Allowed 2400 C=A*B Standard DL Cost PH 9.40 D Total Standard DL Cost 22560 C*D Actual Cost Incurred 23500 E Total Standard DL Cost 22560 F Total Direct Labor Variance -940 Unfavourable F-E 2 Labor Rate Variance -1410 Unfavourable (Standard Rate-Actual Rate)*Actual Hours (9.40-10.00)*2350 Labor Efficency Variance 470 Favourable (Standard Hours-Actual Hours)*Standard Rate (2400-2350)*9.40