Problem 1 Direct Labour Variances Sky Inc. provides in-flight meals for a number of major airlines. One of the company's products in stuffed cannelloni with roasted pepper sauce, fresh baby corn, and spring salad. During the most recent week, the company prepared 6,000 of these meals, using 1,150 direct labour-hours. The company 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. What direct labour cost should have been incurred to prepare 6,000 meals? How much does this differ from the actual direct labour cost? 2. Break down the difference computed in (1) above into a labour rate variance and a labour efficiency variance. Problem

Problem 1 Direct Labour Variances Sky Inc. provides in-flight meals for a number of major airlines. One of the company's products in stuffed cannelloni with roasted pepper sauce, fresh baby corn, and spring salad. During the most recent week, the company prepared 6,000 of these meals, using 1,150 direct labour-hours. The company 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. What direct labour cost should have been incurred to prepare 6,000 meals? How much does this differ from the actual direct labour cost? 2. Break down the difference computed in (1) above into a labour rate variance and a labour efficiency variance. Problem

Financial & Managerial Accounting

14th Edition

ISBN:9781337119207

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter22: Evaluating Variances From Standard Costs

Section: Chapter Questions

Problem 2ADM: United States Postal Service: Mail sorting time variance One of the operations in the United States...

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Factory overhead cost variance report Feeling Better Medical Inc., a manufacturer of disposable medical supplies, prepared the following factory overhead cost budget for the Assembly Department for October of the current year. The company expected to operate the department at 100% of normal capacity of 30,000 hours. During October, the department operated at 28,500 hours, and the factory overhead costs incurred were indirect factory wages, 234,000; power and light, 178,500; indirect materials, 50,600; supervisory salaries, 126,000; depreciation of plant and equipment, 70,000; and insurance and property taxes, 44,000. Instructions Prepare a factory overhead cost variance report for October. To be useful for cost control, the budgeted amounts should be based on 28,500 hours.
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