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 por Hour $6.20 During August, 10,370 hours of direct labor time were needed to make 19,600 units of the Jogging Mate. The direct labor cost totaled $62,220 for the month. Standard Cost $3.10 Required: 1. What is the standard labor-hours allowed (SH) to makes 19,600 Jogging Mates? 2. What is the standard labor cost allowed (SH SR) to make 19,600 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 $4.30 per direct labor-hour. During August, the company incurred $49,776 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 (1.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. Labar spending variance 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 labor standards that have been set for one Jogging Mate are as follows: Standard Hours 30 minutes Standard Rate por Hour $6.20 During August, 10,370 hours of direct labor time were needed to make 19,600 units of the Jogging Mate. The direct labor cost totaled $62,220 for the month. Standard Cost $3.10 Required: 1. What is the standard labor-hours allowed (SH) to makes 19,600 Jogging Mates? 2. What is the standard labor cost allowed (SH SR) to make 19,600 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 $4.30 per direct labor-hour. During August, the company incurred $49,776 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 (1.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. Labar spending variance 4. Labor rate variance 4. Labor efficiency variance 5. Variable overhead rate variance 5. Variable overhead efficiency variance
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 Hours
30 minutes
Standard Rate
per Hour
$6.20
During August, 10,370 hours of direct labor time were needed to make 19,600 units of the Jogging Mate. The direct labor cost totaled
$62,220 for the month.
Standard
Cost
$3.10
Required:
1. What is the standard labor-hours allowed (SH) to makes 19,600 Jogging Mates?
2. What is the standard labor cost allowed (SH SR) to make 19,600 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 $4.30 per direct labor-hour. During August, the company incurred $49,776 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. Labar spending variance
4. Labor rate variance
4. Labor efficiency variance
5. Variable overhead rate variance
5. Variable overhead efficiency variance
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VIEWStep 3: Computation of standard labor cost
VIEWStep 4: Computation of labor spending variance
VIEWStep 5: Computation of labor rate variance and labor efficiency variance.
VIEWStep 6: Computation of variable overhead efficiency variance
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