Air Meals, Inc., prepares in-flight meals for a number of major airlines. One of the company's products is stuffed cannelloni with roasted pepper sauce, fresh baby corn, and spring salad. 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 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: 1a. According to the standards, what direct labor cost should have been incurred to prepare 6,700 meals? 1b. How much does this differ from the actual direct labor cost? 2. Break down the difference computed in (1) above into a labor rate variance and a labor efficiency variance.

Air Meals, Inc., prepares in-flight meals for a number of major airlines. One of the company's products is stuffed cannelloni with roasted pepper sauce, fresh baby corn, and spring salad. 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 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: 1a. According to the standards, what direct labor cost should have been incurred to prepare 6,700 meals? 1b. How much does this differ from the actual direct labor cost? 2. Break down the difference computed in (1) above into a labor rate variance and a labor efficiency variance.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 26E: Ingles Corporation is a manufacturer of tables sold to schools, restaurants, hotels, and other...

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