Exercise 10-4 (Algo) 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 Hours 24 minutes Standard Rate per Hour $5.60 Standard Cost $ 2.24 During August, 8,490 hours of direct labor time were needed to make 19,600 units of the Jogging Mate. The direct labor cost totaled $46,695 for the month. 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 x 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 $4.10 per direct labor-hour. During August, the company incurred $39,054 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.) Standard labor-hours allowed
Exercise 10-4 (Algo) 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 Hours 24 minutes Standard Rate per Hour $5.60 Standard Cost $ 2.24 During August, 8,490 hours of direct labor time were needed to make 19,600 units of the Jogging Mate. The direct labor cost totaled $46,695 for the month. 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 x 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 $4.10 per direct labor-hour. During August, the company incurred $39,054 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.) Standard labor-hours allowed
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Variance Analysis
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Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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![Exercise 10-4 (Algo) 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
Hours
24 minutes
Standard Rate
per Hour
$ 5.60
Standard
Cost
$ 2.24
During August, 8,490 hours of direct labor time were needed to make 19,600 units of the Jogging Mate. The direct labor cost totaled
$46,695 for the month.
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 x 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 $4.10 per direct labor-hour. During August, the company incurred $39,054 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 i
4. Labor efficiency variance
5. Variable overhead rate variance
5. Variable overhead efficiency variance](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9387e1e0-1e47-476d-8945-2ad53037937b%2F8415f797-6448-407a-93a9-5939366a013a%2Fr1njf4b_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 10-4 (Algo) 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
Hours
24 minutes
Standard Rate
per Hour
$ 5.60
Standard
Cost
$ 2.24
During August, 8,490 hours of direct labor time were needed to make 19,600 units of the Jogging Mate. The direct labor cost totaled
$46,695 for the month.
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 x 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 $4.10 per direct labor-hour. During August, the company incurred $39,054 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 i
4. Labor efficiency variance
5. Variable overhead rate variance
5. Variable overhead efficiency variance
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