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 Standard Rate per Hour Standard Cost 30 minutes $6.20 $3.10 During August, 10,580 hours of direct labor time were needed to make 19,600 units of the Jogging Mate. The direct labor cost totaled $64,538 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 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 $46,552 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.)

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 Hours per Hour Cost 30 minutes $6.20 $3.10 During August 10,580 hours of direct labor time were needed to make 19.600 units of the Jogging Mate. The direct labor cost totaled $64.538 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 * 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 $46.552 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month. (For requirements 3 through 3, Indicate the effect of each varlance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (1.e., zero varlence). Input all amounts es positive values. Do not round Intermediate calculations.) 9.800 $ 60,760 1. Standard labor-hours allowed 2. Standard labor cost allowed 3. Labor spending variance 4. Labor rate variance Labor efficiency variance 5. Variable overhead rate variance Variable overhead efficiency variance