Question

Exercise 10-4 Direct Labor and Variable Manufacturing Overhead Variances (LO10-2, LO10-3] Erie Company manufactures a mobile fitness device called the Jogging Mate. The company uses standards to control its costs. The labor standards that have been set for one Jogging Mate are as follows: Standard Standard Hours 24 minutes Standard Rate per Hour $5.40 $2.16 During August, 8,300 hours of direct labor time were needed to make 19,300 units of the Jogging Mate. The direct labor cost totaled $43,990 for the month. Required: 1. What is the standard labor-hours allowed (SH) to makes 19,300 Jogging Mates? 2. What is the standard labor cost allowed (SH ~ SR) to make 19,300 Jogging Mates? 3. What is the labor spending variance? 4. What is the labor rate variance and the labor efficiency variance? 5. The budgeted variable manufacturing overhead rate is $4.70 per direct labor-hour. During August, the company incurred $46,480 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month.

Answer 1

- 7720 Don Number of units manufacderceol.ca) = 19300 Solenolard labore time per one's(b) . Ou (Q4 min 60min per hour) Silandared labor hours allowed - (a) xeb) * Silandard laboue-boues allowed ca).. 7720 sland and drie lebon rete pechaurel) 3.6 3.40 Standard labor cost allowed .. (@) x6) ? $ 41688 © Helval dereed labor casal(a)42990 Standard lebar cost allowed b] - $ 48688 Labor spending Variance (2) - 6) » $ 2302 U (AH XAR) (AH XSR) (SHxSk) -$43990. *(9300 X85.40) = (7720 X$ 5.40) €44820 of 41688 #18301F I Laborrate 3932 u Vory anes Labor efficiency variance if cascaj u (Spending Variance)

O (AH XAR) (AHY'SR) (SH x SR) :$ 46480 =($300 x 84,70) - (7720X54.70 >$390103 36284 917470] U. Variable $(27260 Variablet Overhead Kate Varu'once oufficiency overheed variance 810196 U (spending Variance ) Answers 11.15.landard labore hours allowed 1 7720 2. Islandard laborced allowed 134 1 688 13. haberepending vaniance 1$_23027 14. haben treate ariance _$ 830 LEI Ihabou efficieny variance $_31320 S amiable overheadlocal variance $ 7470 U I Variable oresheedle ficere percance / $ 2726 10 7 0