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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 Rate Standard Hours per Hour Cost 30 minutes $ 6.20 $ 3.10 During August, 10,570 hours of direct labor time were needed to make 20,000 units of the Jogging Mate. The direct labor cost totaled $63,420 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?

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 Rate Standard Hours per Hour Cost 30 minutes $ 6.20 $ 3.10 During August, 10,570 hours of direct labor time were needed to make 20,000 units of the Jogging Mate. The direct labor cost totaled $63,420 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?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 Rate Standard per Hour $ 6.20 Hours Cost 30 minutes $ 3.10 During August, 10,570 hours of direct labor time were needed to make 20,000 units of the Jogging Mate. The direct labor cost totaled $63,420 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 x 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 $4.50 per direct labor-hour. During August, the company incurred $50,736 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.) 1. Standard labor-hours allowed 2. Standard labor cost allowed 3. Labor spending variance 4. Labor rate variance 4. Labor efficiency variance 5. Variable overhead rate variance 5. Variable overhead efficiency variance
Transcribed Image Text: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 Rate Standard per Hour $ 6.20 Hours Cost 30 minutes $ 3.10 During August, 10,570 hours of direct labor time were needed to make 20,000 units of the Jogging Mate. The direct labor cost totaled $63,420 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 x 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 $4.50 per direct labor-hour. During August, the company incurred $50,736 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.) 1. Standard labor-hours allowed 2. Standard labor cost allowed 3. Labor spending variance 4. Labor rate variance 4. Labor efficiency variance 5. Variable overhead rate variance 5. Variable overhead efficiency variance
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