Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

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: Budgeted fixed overhead was estimated to be $18,375 per month. Fixed overhead cost is applied using direct labour-hours. During August, 4,700 hours of direct labour time was recorded in the manufacture of 16,500 units of the Jogging Mate. The direct labour cost totalled $57,975 for the month. Actual variable overhead and fixed overhead costs were $17,860 and $26,400, respectively. Required: 1-a. What direct labour cost should have been incurred in the manufacture of the 16,500 units of the Jogging Mate? (Do not round intermediate calculations.) 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).) 2. Calculate the labour rate variance and labour efficiency variance? (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) 3. Compute the variable overhead spending and efficiency variances for the month. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) 4. Suppose the static budget volume is 15,500 players_this is the denominator volume. Compute the volume variance for fixed overhead cost. (Round intermediate calculations to the nearest whole dollar amount. Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) 5. Suppose that the static budget volume is also the normal volume and that the budgeted variable overhead cost in the static budget is $21,000. Given the standard cost card data in the question, calculate the under- or overapplied fixed overhead for August. (Do not round intermediate calculations.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Effectiveness Analysis Methods And Applications

Authors: Henry M. Levin, Patrick J. McEwan

2nd Edition

0761919333, 978-0761919339

More Books

Students also viewed these Accounting questions