Erie Company manufactures a mobile fitness device called the Jogging Mate. The company uses standards to control its costs. The abor 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 × 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 10,000 2. Standard labor cost allowed $ 62,000 3. Labor spending variance 2$ 1,420 U 4. Labor rate variance 4. Labor efficiency variance 5. Variable overhead rate variance 5. Variable overhead efficiency variance
Erie Company manufactures a mobile fitness device called the Jogging Mate. The company uses standards to control its costs. The abor 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 × 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 10,000 2. Standard labor cost allowed $ 62,000 3. Labor spending variance 2$ 1,420 U 4. Labor rate variance 4. Labor efficiency variance 5. Variable overhead rate variance 5. Variable overhead efficiency variance
Chapter1: Financial Statements And Business Decisions
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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 × 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
10,000
2. Standard labor cost allowed
$ 62,000
3. Labor spending variance
$
1,420 U
4. Labor rate variance
4. Labor efficiency variance
5. Variable overhead rate variance
5. Variable overhead efficiency variance
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