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Determine total direct labor cost variance

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Reference no: EM132716791

Problem - Direct labor variances for a service company

Mexicali On the Go Inc. owns and operates food trucks (mobile kitchens) throughout the west coast. The company's employees have varying wage levels depending on their experience and length of time with the company. Employees work 8-hour shifts and are assigned to a truck each day based on labor needs to support the daily menu. One of its trucks, Donna's Mobile Fiesta offers a single menu item that changes daily. On May 6, the truck prepared 70 of its most popular item, the Breakfast Enchilada. The following data are available for that day:

Quantity of direct labor used (2 employees, working 8-hour shifts) 16 hrs.

Actual rate for direct labor $15.40 per hr.

Standard direct labor per meal 0.2 hr.

Standard rate for direct labor $16.00 per hr.

Required -

a. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance.

b. Discuss what might have caused these variances.

Reference no: EM132716791

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