Exercise 9-5 Direct Labor Variances [LO9-5] 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 4,000 of these meals using 960 direct labor-hours. The company paid its direct labor workers a total of $19,200 for this work, or $20.00 per hour. According to the standard cost card for this meal, it should require 0.25 direct labor-hours at a cost of $19.75 per hour Required: 1. What is the standard labor-hours allowed (SH) to prepare 4,000 meals? 2. What is the standard labor cost allowed (SH x SR) to prepare 4,000 meals? 3. What is the labor spending variance? 4. What is the labor rate variance and the labor efficiency variance? (For requirements 3 and 4, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) 1. Standard labor-hours allowed 2. Standard labor cost allowed 3. Labor spending variance 4 Labor rate variance Labor efficiency variance
Exercise 9-5 Direct Labor Variances [LO9-5] 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 4,000 of these meals using 960 direct labor-hours. The company paid its direct labor workers a total of $19,200 for this work, or $20.00 per hour. According to the standard cost card for this meal, it should require 0.25 direct labor-hours at a cost of $19.75 per hour Required: 1. What is the standard labor-hours allowed (SH) to prepare 4,000 meals? 2. What is the standard labor cost allowed (SH x SR) to prepare 4,000 meals? 3. What is the labor spending variance? 4. What is the labor rate variance and the labor efficiency variance? (For requirements 3 and 4, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) 1. Standard labor-hours allowed 2. Standard labor cost allowed 3. Labor spending variance 4 Labor rate variance Labor efficiency variance
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter9: Evaluating Variances From Standard Costs
Section: Chapter Questions
Problem 3MAD
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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