During August, 8,460 hours of direct labor time were needed to make 19,400 units
ID: 2458398 • Letter: D
Question
During August, 8,460 hours of direct labor time were needed to make 19,400 units of the Jogging Mate. The direct labor cost totaled $43,992 for the month.
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?
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
The budgeted variable manufacturing overhead rate is $4.7 per direct labor-hour. During August, the company incurred $45,684 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month.
Standard
Hours Standard Rate
per Hour Standard
Cost 24 minutes $5.40 $2.16
Explanation / Answer
Particulars Standard Actual Qty Rate amount Qty Rate amount Labour 7,760.00 5.4000 41,904.00 8,460.00 5.20 43,992.00 Overhead 7,760.00 4.70 36,472.00 8,460.00 5.40 45,684.00 Actual output 19,400.00 Standard Labour hrs reqd(19400*24/60) 7,760.00 Standard Labour Cost= 7,760*5.4 41,904.00 Actual Labour Cost 43,992.00 Difference between Standard and Actual (2,088.00) DLRV= (SR-AR)AH DLRV= (5.4-5.2)8460 DLRV= 1,692 F DLEV = (SH-AH)SR DLEV = (7760-8460)5.4 DLEV = 3,780 U VORV = (SR-AR)AH VORV = (4.7 - 5.4)8460 VORV = 5,922 U VOEV = (SH-AH)SR VOEV = (7760-8460)4.7 VOEV = 3,290 U
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