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 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.