Erie Company manufactures a small mp3 player called the Jogging Mate. The compan
ID: 2526175 • 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:
During August, 8,630 hours of direct labor time were needed to make 19,600 units of the Jogging Mate. The direct labor cost totaled $44,876 for the month.
According to the standards, what direct labor cost should have been incurred to make 19,600 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. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). )
The budgeted variable manufacturing overhead rate is $4.5 per direct labor-hour. During August, the company incurred $44,876 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month. (Do not round intermediate calculations and round your final answers to nearest whole dollar. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
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:
StandardHours Standard Rate
per Hour Standard
Cost 24 minutes $5.40 $2.16
During August, 8,630 hours of direct labor time were needed to make 19,600 units of the Jogging Mate. The direct labor cost totaled $44,876 for the month.
Required: 1.According to the standards, what direct labor cost should have been incurred to make 19,600 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
Explanation / Answer
solution Information table Standard Actual-19600 units Hours rate Cost Hours rate Cost 7840 5.4 42336 8630 5.2 44876 (19600*24 mind/60) Variable OH 7840 4.5 35280 8630 5.2 44876 1 Number of units manufactured 19600 Standard labour time per unit 24 mins Total Standard hours of labour time allowed 7840 Standard labour rate per hour 5.4 Total Standard direct labour cost 42336 Actual labour cost 44876 Standard Direct labour cost 42336 Total Variance unfavourable 2540 2 Labour rate variance= (std rate-actual rate)* actual hours (5.4-5.2)*19600 1726 favourable Labour efficiency variance= (Std hours-actual hours)*std rate (7840-8630)*5.4 -4266 unfavourable 3 Variable oh rate variance= (std rate-actual rate)* actual hours (4.5-5.2)*19600 -6041 unfavourable variable oh efficiency variance= (Std hours-actual hours)*std rate (7840-8630)*4.5 -3555 unfavourable
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.