LSCS Portal Page 1httpsne ter 10 Graded Exercises Help Save

LSCS Portal Page 1https://ne ter 10 Graded Exercises Help Save & Exit 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 27 minutes $6.40 $2.88 ing August. 9,370 hours of direct labor time were needed to moke 19 200 unts of the Jogging Mate.The direct labor cost totaled $59,031 for the month. Required 1. What is the standard labor-hours allowed (SH) to makes 19.200 Jogging Mates? 2. What is the standard labor cost allowed (SH x SR) to make 19,200 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 $50.598 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 (l.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.)

Solution

Answer 1. Standard Labor-hours Allowed (SH) = 19,200 Units X 0.45 hrs (Standard Hours required per unit) Standard Labor-hours Allowed (SH) = 8,640 hrs Answer 2. Standard Labor Cost Allowed = SH X SR Standard Labor Cost Allowed = 8,640 hrs X $6.40 Standard Labor Cost Allowed = $55,296 Answer 3. Labor Spending Variance = Standard Cost - Actual Cost Labor Spending Variance = $55,296 - $59,031 Labor Spending Variance = $3,735 (U) Answer 4. Labor Rate Variance = (SR - AR) X AH AR = $59,031 (Total Actual Labor Cost) / 9,370 hrs (Actual Hours) AR = $6.30 per hour (Approx.) Labor Rate Variance = ($6.40 - $6.30) X 9,370 hrs Labor Rate Variance = $937 (F) Labor Efficiency Variance = (SH - AH) X SR Labor Efficiency Variance = (8,640 hrs - 9,370 hrs) X $6.40 per hr Labor Efficiency Variance = $4,672 (U) Answer 5. Variable Overhead Rate Variance = (SR - AR) X AH AR = $50,598 / 9,370 hrs AR = $5.40 per hour Variable Overhead Rate Variance = ($4.50 - $5.40) X 9,370 hrs Variable Overhead Rate Variance = $8,433 (U) Variable Overhead Efficiency Variance = (SH - AH) X SR Variable Overhead Efficiency Variance = (8,640 hrs - 9,370 hrs) X $4.50 per hr Variable Overhead Efficiency Variance = $3,285 (U)