EBK OM
6th Edition
ISBN: 9781305888210
Author: Collier
Publisher: YUZU
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Chapter 2, Problem 7PA
Summary Introduction
Interpretation: Whether current system needs to be changed or not.
Concept Introduction: Productivity is the effectiveness of the input required to produce output. It is the ratio of output to input. It shows the efficiency of input for the production of output.
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Students have asked these similar questions
McDonalds has a drive-through window and, during peak lunch times, can handle a maximum of 85 cars per hour with one person taking orders, assembling them, and acting as cashier. The average sale per order is $12.00.
A proposal has been made to add two additional workers and divide the tasks among the three. One will take orders, the second will assemble them, and the third will act as a cashier. With this system, it is estimated that 120 cars per hour can be serviced. Use productivity arguments to recommend whether or not to change the current system.
Hint: Productivity = revenue/labor dollar
A fast-food restaurant has a drive-thru window and during peak lunch times can handle a maximum of 60 cars per hour with one person taking orders, assembling them, and acting as cashier. The average sale per order is $9.50. A proposal has been made to add two workers and divide the tasks among the three. One will take orders, the second will assemble them, and the third will act as a cashier. With this system, it is estimated that 85 cars per hour can be serviced.
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 4,300 of these meals using 1,250 direct labor-hours. The company paid its direct labor workers a total of $11,250 for this work, or $9.00 per hour.
According to the standard cost card for this meal, it should require 0.30 direct labor-hours at a cost of $8.50 per hour.
Required:
1. What is the standard labor-hours allowed (SH) to prepare 4,300 meals?
2. What is the standard labor cost allowed (SH × SR) to prepare 4,300 meals?
3. What is the labor spending variance?
4. What is the labor rate variance and the labor efficiency variance?
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