Exercise 10-2 (Algo) Direct Labor Variances [LO10-2] 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 x 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? (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.) S 1. Standard labor-hours allowed 2. Standard labor cost allowed 3. Labor spending variance 4. Labor rate variance 4. Labor efficiency variance

Factory Overhead Cost Variance Report Tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May of the current year. The company expected to operate the department at 100% of normal capacity of 7,300 hours. Variable costs:        Indirect factory wages $23,360      Power and light 13,724      Indirect materials 10,804       Total variable cost   $47,888 Fixed costs:        Supervisory salaries $14,610      Depreciation of plant and equipment 37,470      Insurance and property taxes 11,430       Total fixed cost   63,510 Total factory overhead cost   $111,398 During May, the department operated at 7,700 standard hours. The factory overhead costs incurred were indirect factory wages, $24,890; power and light, $14,220; indirect materials, $11,600; supervisory salaries, $14,610; depreciation of plant and equipment, $37,470; and insurance and property taxes, $11,430.…

A-7

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