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.

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 6,700 of these meals using 1,300 direct labor-hours. The company paid these direct labor workers a total of $16,900 for this work, or $13.00 per hour.

According to the standard cost card for this meal, it should require 0.20 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 6,700 meals? How much does this differ from the actual direct labor cost?    Explanation: 2. Actual Hours of Input, at the Actual Rate   Actual Hours of Input, at the Standard Rate   Standard Hours Allowed for Output, at the Standard Rate (AH × AR)   (AH × SR)   (SH × SR) 1,300 hours × $13.00 per hour   1,300 hours × $12.50 per hour   1,340 hours × $12.50 per hour = $16,900   = $16,250   = $16,750   Rate Variance, $650 U Efficiency Variance, $500 F     Spending Variance, $150 U   Alternatively, the variances can be computed using the formulas: Labor rate variance = AH(AR – SR) = 1,300 hours ($13.00 per hour – $12.50 per hour) = $650 U Labor efficiency variance = SR(AH – SH) = $12.50 per hour (1,300 hours – 1,340hours) = $500 F