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 Hours |
Standard Rate per Hour |
Standard Cost |
18 minutes | $17.00 | $5.10 |
During August, 5,750 hours of direct labor time were needed to make 20,000 units of the Jogging Mate. The direct labor cost totaled $102,350 for the month.
Required:
1. What is the standard labor-hours allowed (SH) to makes 20,000 Jogging Mates?
2. What is the standard labor cost allowed (SH × SR) to make 20,000 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 per direct labor-hour. During August, the company incurred $21,850 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency 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.)
Solution
Standard labor hours Allowed | 6000 | |
Standard labor cost allowed | $ 102,000.00 | |
Labor Spending Variance | $ 350.00 | Unfavourable-U |
Labor rate Variance | $ 4,600.00 | Unfavourable-U |
Labor Efficiency variance | $ 4,250.00 | Favourable-F |
Working
20000 | Units | ||
Quantity (AQ) | Rate (AR) | Actual Cost | |
Direct labor | 5750 | $ 17.80 | $ 102,350.00 |
.
Standard DATA for | 20000 | Units | |
Quantity (SQ) | Rate (SR) | Standard Cost | |
[A] | [B] | [A x B] | |
Direct labor | ( 0.3 Hour x 20000 Units)=6000 Hour | $ 17.00 | $ 102,000.00 |
.
Labor Rate Variance | ||||||
( | Standard Rate | - | Actual Rate | ) | x | Actual Labor Hours |
( | $ 17.00 | - | $ 17.80 | ) | x | 5750 |
-4600 | ||||||
Variance | $ 4,600.00 | Unfavourable-U | ||||
Labour Efficiency Variance | ||||||
( | Standard Hours | - | Actual Hours | ) | x | Standard Rate |
( | 6000 | - | 5750 | ) | x | $ 17.00 |
4250 | ||||||
Variance | $ 4,250.00 | Favourable-F | ||||
Labor Spending Variance | ||||||
( | Standard Cost | - | Actual Cost | ) | ||
( | $ 102,000.00 | - | $ 102,350.00 | ) | ||
-350 | ||||||
Variance | $ 350.00 | Unfavourable-U |
Erie Company manufactures a mobile fitness device called the Jogging Mate. The company uses standards to...
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 Hours 30 minutes Standard Rate per Hour $6.00 Standard Cost $3.00 During August, 10,690 hours of direct labor time were needed to make 20,000 units of the Jogging Mate. The direct labor cost totaled $63,071 for the month. Required: 1. What is the standard labor-hours allowed...
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 Hours 24 minutes Standard Rate Standard per Hour Cost $6.20 $2.48 During August, 8,770 hours of direct labor time were needed to make 20,000 units of the Jogging Mate. The direct labor cost totaled $52,620 for the month. Required: 1. What is the standard labor-hours allowed...
Erie Company manufactures a mobile fitness device called the Jogging Mate. The company uses standards to control its costs. The Elabor standards that have been set for one Jogging Mate are as follows: Standard Hours 24 minutes Standard Rate per Hour $5.80 Standard Cost $2.32 During August, 8,420 hours of direct labor time were needed to make 19,800 units of the Jogging Mate. The direct labor cost totaled $47,994 for the month. Required: 1. What is the standard labor-hours allowed...
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 Hours 27 minutes Standard Rate per Hour $5.60 Standard Cost $2.52 During August, 9,240 hours of direct labor time were needed to make 19,400 units of the Jogging Mate. The direct labor cost totaled $50,820 for the month. Required: 1. What is the standard labor-hours allowed...
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 Hours 27 minutes Standard Rate per Hour $5.80 Standard Cost $2.61 During August, 9,485 hours of direct labor time were needed to make 19,300 units of the Jogging Mate. The direct labor cost totaled $53,116 for the month. Required: 1. What is the standard labor-hours allowed...
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 Hours 24 minutes Standard Rate per Hour $5.80 Standard Cost $2.32 During August, 8,540 hours of direct labor time were needed to make 19,400 units of the Jogging Mate. The direct labor cost totaled $48,678 for the month. Required: 1. What is the standard labor-hours allowed...
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 Hours 27 minutes Standard Rate Standard per Hour Cost $5.80 $2.61 During August, 9,490 hours of direct labor time were needed to make 19,600 units of the Jogging Mate. The direct labor cost totaled $53,144 for the month. Required: 1. What is the standard labor-hours allowed...
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 Hours 27 minutes Standard Rate Standard per Hour Cost $6.20 $2.79 During August, 9,170 hours of direct labor time were needed to make 19,200 units of the Jogging Mate. The direct labor cost totaled $55,937 for the month. Required: 1. What is the standard labor-hours allowed...
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 Hours 27 minutes Standard Rate per Hour $5.80 Standard Cost $2.61 During August, 9,415 hours of direct labor time were needed to make 19,700 units of the Jogging Mate. The direct labor cost totaled $53,666 for the month. Required: 1. What is the standard labor-hours allowed...
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 Hours 24 minutes Standard Rate Standard per Hour Cost $5.80 $5.80 $2.32 During August, 8,400 hours of direct labor time were needed to make 19,500 units of the Jogging Mate. The direct labor cost totaled $47,040 for the month. Required: 1. What is the standard labor-hours...