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Erie Company manufactures an MP3 player called the Jogging Mate. The company uses standards to control its costs. The labour and variable overhead standards
Erie Company manufactures an MP3 player called the Jogging Mate. The company uses standards to control its costs. The labour and variable overhead standards that have been set for one Jogging Mate MP3 player are as follows: Standard Rate per Direct labour Variable overhead Standard Hours 18 minutes 18 minutes Hour $18.00 $ 5.00 Standard Cost $ 5.40 $ 1.50 Budgeted fixed overhead was estimated to be $30,000 per month. Fixed overhead cost is applied using direct labour-hours. During August, 5,450 hours of direct labour time was recorded in the manufacture of 19,000 units of the Jogging Mate. The direct labour cost totalled $109,100 for the month. Actual variable overhead and fixed overhead costs were $20,710 and $30,400, respectively. Required: 1-a. What direct labour cost should have been incurred in the manufacture of the 19,000 units of the Jogging Mate? (Do not round intermediate calculations.) Direct labour cost 1-b. Calculate the total direct labor cost variance? (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Variance
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