Exercise 9-10 (Algo) Direct Labor and Variable Manufacturing Overhead Variances (LO9-5, LO9-6] 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 Rate Standard Cost $2.70 Standard Hours per Hour 27 minutes $6.00 During August, 9,180 hours of direct labor time were needed to make 19,000 units of the Jogging Mate. The direct labor cost totaled $54,162 for the month. Required: 1. What is the standard labor-hours allowed (SH) to makes 19,000 Jogging Mates? 2. What is the standard labor cost allowed (SH x SR) to make 19,000 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 $45,900 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.)
Exercise 9-10 (Algo) Direct Labor and Variable Manufacturing Overhead Variances (LO9-5, LO9-6] 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 Rate Standard Cost $2.70 Standard Hours per Hour 27 minutes $6.00 During August, 9,180 hours of direct labor time were needed to make 19,000 units of the Jogging Mate. The direct labor cost totaled $54,162 for the month. Required: 1. What is the standard labor-hours allowed (SH) to makes 19,000 Jogging Mates? 2. What is the standard labor cost allowed (SH x SR) to make 19,000 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 $45,900 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.)
Chapter8: Standard Costs And Variances
Section: Chapter Questions
Problem 11EB: Fitzgerald Company manufactures sewing machines, and they produced 2,500 this past month. The...
Related questions
Concept explainers
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
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.
Topic Video
Question
VikramBhai
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College