SkyInc provides 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 made 6,000 of these meals, actually using 1,150 direct labour-hours. The company actually paid these direct labour workers a total of $11,500 for this work, or $10 per hour.       According to the standard cost card for this meal, it should require 0.20 direct labour hours at a cost of $9.50 per hour.                                                               Required:                                                                       1. Break down the difference computed in (1) above into a labour rate variance and a labour efficiency variance.                                                                                                       Part 1                                                       AH x AR       AH x SR       SH x SR                                                                                                                                         RATE VARIANCE   EFFICIENCY VARIANCE                                                                                     TOTAL LABOUR VARIANCES

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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SkyInc provides 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 made 6,000 of these meals, actually using 1,150 direct labour-hours. The company actually paid these direct labour workers a total of $11,500 for this work, or $10 per hour.
     
According to the standard cost card for this meal, it should require 0.20 direct labour hours at a cost of $9.50 per hour.                              
                               
Required:                                  
                                   
1. Break down the difference computed in (1) above into a labour rate variance and a labour efficiency variance.                                  
                                   
                               
Part 1                                                    
  AH x AR       AH x SR       SH x SR                      
                                                     
                   
                                   
    RATE VARIANCE   EFFICIENCY VARIANCE      
                                   
                                   
      TOTAL LABOUR VARIANCES    
                               
                               
                               
                               
             

 

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