4:05 PM ezto.mheducation.com .1.1 Sprint? Erie Company Jogging Mate. The company

Question

4:05 PM ezto.mheducation.com .1.1 Sprint? Erie Company Jogging Mate. The company uses standards to control its costs. The labor standards that have been set for one Jogging Mate mp3 player are as follows: a small mp3 player called the During August, 8,310 hours of direct labor time were needed to make 19,400 units of the Jogging Mate. The direct labor cost totaled $49,029 for the month. Required: According to the standards, what direct labor cost should have been incurred to make 19,400 units of the Jogging Mate? By how much does this differ from the cost that was incurred? (Round Standard labor time per unit to 2 decimal places.) Break down the difference in cost from (1) above into a labor rate variance and a labor efficiency variance. (Indicate the effect of each variance by selecting "F for favorable, "U" for unfavorable, and "None" for no effect (ie., zero variance). Do not round intermediate calculations.) The budgeted variable manufacturing overhead rate is $4.5 per direct labor-hour, During August, the company incurred $43,212 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month. (Indicate the effect of each variance by selecting "F for favorable, "U" for unfavorable, and "Nono" for no cffect (i.e., zero variance). Do not round intermediate calculations and round your final answers to nearest whole dollar.)

Explanation / Answer

1) Schedule :

2) Direct labour rate variance = (6*8310-49029) = 831 F

Direct labour efficiency variance = (7760-8310)*6 = 3300 U

3) Variable overhead rate variance = (4.5*8310-43212) = 5817 U

Variable overhead efficiency variance = (7760-8310)*4.5 = 2475 U

No of units manufactured 19400 Standard labour time per unit (24/60) 0.40 Total standard hours of labour time allowed 7760 Standard direct labour rate per hour 6 Total standard direct labour cost 46560 Actual direct labour cost 49029 Total standard direct labour cost 46560 Total variance-Unfavorable 2469

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