Question

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 7,200 of these meals using 3,500 direct labor-hours. The company paid its direct labor workers a total of $31,500 for this work, or $9.00 per hour.According to the standard cost card for this meal, it should require 0.50 direct labor-hours at a cost of $8.50 per hour.Required:1. What is the standard labor-hours allowed (SH) to prepare 7,200 meals?2. What is the standard labor cost allowed (SH × SR) to prepare 7,200 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. Do no round intermediate calculations.).Dawson Toys, Ltd., produces a toy called the Maze. The company has recently established a standard cost system to help control costs and has established the following standards for the Maze toy:Direct materials: 8 microns per toy at $0.34 per micronDirect labor: 1.4 hours per toy at $6.70 per hourDuring July, the company produced 5,000 Maze toys. The toy's production data for the month are as follows:Direct materials: 78,000 microns were purchased at a cost of $0.33 per micron. 28,000 of these microns were still in inventory at the end of the month.Direct labor: 7,500 direct labor-hours were worked at a cost of $54,750.Required:1. Compute the following variances for July: (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. Do not round intermediate calculations. Round final answer to the nearest whole dollar amount.)a. The materials price and quantity variances.b. The labor rate and efficiency variances.

Answer 1

Answer:

Check the calculations below

Explanation:

Labor rate variance = actual quantity*actual rate - actual quantity*standard rate

actual quantity = 3500 direct labor hours. actual rate = $9 per hour. standard rate = $8.50 per hour

labor rate variance = 3500 hours*$9 per hour - 3500 hours*$8.50 per hour

= $1,750 (Unfavorable)

Labor efficiency variance = actual hours*standard rate - standard hours*standard rate

standard hours = 7200 meals*0.50 direct labor hour per meal = 3600 hours

labor efficiency variance = 3500 hours*$8.50 per hour - 3600 hours*$8.50 per hour

= - $850 (favorable)