work, Ch 10 6 Erie Company manufactures a mobile fitness device called the Joggi
ID: 2519415 • Letter: W
Question
work, Ch 10 6 Erie Company manufactures a mobile fitness device called the Jogging Mate. The company uses standards to labor standards that have been set for one Jogging Mate are as follows: control its costs. The 30 6.40 $3.20 During August, 10,150 hours of direct labor time were needed to make 19,200 units of the Jogging Mate. The direct labor cost totaled $62,930 for the month. Required: 1. What is the standard labor-hours allowed (SH) to makes 19,200 Jogging Mates? 2. What is the standard labor cost allowed (SH x SR) to make 19,200 Jogging Mates? s 3. What is the labor spending varlance? 4. What is the labor rate variance and the labor efficiency variance? 5. The budgeted variable manufacturing overhead rate is $4.50 per direct labor-hour. During August, the company incurred $54,810 in variable manufacturing overhead cost. Compute the variable overhead rate and efficlency variances for the month. (For requirements 3 through 5, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.)Explanation / Answer
AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate Requirement 1 Standard labour hours allowed = Actual units X Standard hours per unit = 19,200 X 0.5 Hour = 9,600Hours Requirement 2 Standard labour cost allowed = SH X SR = 9,600 hours X 6.40 per hour = $61,440 Requirement 3 Labour Spending variance = Standard labor cost - Actual labor cost = $61,440-$62,930 = $1,490 Unfavourable Requirement 4 Labour Rate Variance = (Standard rate - Actual rate) X Actual Hours SRXAH - AR XAH = (6.40 X 10150) -62,930 = $2,030 Favourable Requirement 5 Labour Efficiency Variance = (Standard Hours for Actual Output - Actual Hours worked ) X Standard rate =(9,600-10,150) X6.40 = 3,520 Unfavourable
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