SkyChefs, Incorporated, prepares in-flight meals for a number of major airlines. One of the company’s products is grilled salmon with new potatoes and mixed vegetables. During the most recent week, the company prepared 3,500 of these meals using 1,710 direct labor-hours. The company paid its direct labor workers a total of $23,940 for this work, or $14.00 per hour. According to the standard cost card for this meal, it should require 0.50 direct labor-hours at a cost of $13.50 per hour. Required: 1. What is the standard labor-hours allowed (SH) to prepare 3,500 meals? 2. What is the standard labor cost allowed (SH × SR) to prepare 3,500 meals? 3. What is the labor spending variance? 4. What is the labor rate variance and the labor efficiency variance?
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, Incorporated, prepares in-flight meals for a number of major airlines. One of the company’s products is grilled salmon with new potatoes and mixed vegetables. During the most recent week, the company prepared 3,500 of these meals using 1,710 direct labor-hours. The company paid its direct labor workers a total of $23,940 for this work, or $14.00 per hour.
According to the
Required:
1. What is the standard labor-hours allowed (SH) to prepare 3,500 meals?
2. What is the standard labor cost allowed (SH × SR) to prepare 3,500 meals?
3. What is the labor spending variance?
4. What is the labor rate variance and the labor efficiency variance?
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