Erie Company manufactures a small mp3 player called the Jogging Mate. The compan
ID: 2522281 • Letter: E
Question
Erie Company manufactures a small mp3 player called the 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 Hours 30 minutes Cost 53.10 $6.20 During August, 10,180 hours of direct labor time were needed to make 19,100 units of the Jogging Mate The direct labor cost totaled $62,098 for the month Required: 1. According to the standards, what direct labor cost should have been incurred to make 19,100 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.) Number of units manufactured Standard labor time per unit Total standard hours of labor time allowed Standard direct labor rate per hour Total standard direct labor cost Actual direct labor cost Standard direct labor cost Total variance-unfavorable 2. 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 errect (i.e., zero variance). Do not round intermediate calculations.)Explanation / Answer
1) Schedule :
2) Labour rate variance = (6.2*10180-62098) = 1018 F
Labour efficiency variance = (9550-10180)*6.2 = 3906 U
3) Variable overhead rate variance = (4.3*10180-50900) = 7126 U
Variable overhead efficiency variance = (9550-10180)*4.3 = 2709 U
No of units manufactured 19100 Standard labour time per unit 0.50 Total standard hour allowed 9550 Rate per hour 6.2 Standard labour cost 59210 Actual labour cost 62098 Standard labour cost 59210 Total variance-Unfavorable 2888Related Questions
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