SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of the company’s products isgrilled 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 these directlabor workers a total of $9,600 for this work, or $10.00 per hour.According to the standard cost card for this meal, it should require 0.25 direct labor-hours at a cost of$9.75 per hour.Required:1. What direct labor cost should have been incurred to prepare 4,000 meals? How much does this differfrom the actual direct labor cost?2. Break down the difference computed in (1) above into a labor rate variance and a labor efficiencyvariance.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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 these direct
labor workers a total of $9,600 for this work, or $10.00 per hour.
According to the
$9.75 per hour.
Required:
1. What direct labor cost should have been incurred to prepare 4,000 meals? 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.
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