Erie Company manufactures a small mp3 player called the Jogging Mate. The compan
ID: 2431952 • Letter: E
Question
Erie Company manufactures a small mp3 player called the Jogging Mate. The company uses standards to control its costs. The labor standards that have been set for one Jogging Mate mp3 player are as follows Standard Rate per Hour $6.40 Standard Cost $3.20 Standard Hours 30 minutes During August, 10,580 hours of direct labor time were needed to make 19,900 units of the Jogging Mate. The direct labor cost totaled $65,596 for the month. Required 1. According to the standards, what direct labor cost should have been incurred to make 19,900 units of the Jogging Mate? By how much does this differ from the cost that was incurred? (Round Standard labor time per unit to 2 decimal places.) Number of units manufactured Standard labor time per unit Total standard hours of labor time allowed Standard direct labor rate per hour Total standard direct labor cost Actual direct labor cost Standard direct labor cost Total variance-unfavorableExplanation / Answer
Answers
---Requirement 1
A
No. of units manufactured
19,900 units
B
Standard labor time per unit
30 minutes = 0.5 hours
C = A x B
Total Standard hours of labor time allowed
9,950 hours
D
Standard direct labor rate per hour
$ 6.40
E = C x D
Total Standard direct labor cost
$ 63,680
F
Actual Direct labor cost
$ 65,596
G = E
Standard direct labor cost
$ 63,680
H = F – G
Total Variance – Unfavourable
$ 1,916
---Requirement 2
Labor Rate Variance
(
Standard Rate
-
Actual Rate
)
x
Actual Labor Hours
(
$ 6.40
-
$ 6.20
)
x
10580
2116
Variance
$ 2,116.00
Favourable-F
Labour Efficiency Variance
(
Standard Hours
-
Actual Hours
)
x
Standard Rate
(
9950
-
10580
)
x
$ 6.40
-4032
Variance
$ 4,032.00
Unfavourable-U
---Requirement 3
Variable Overhead Rate Variance
(
Standard Rate
-
Actual Rate
)
x
Actual Labor Hours
(
$ 4.30
-
$ 4.80
)
x
10580
-5290
Variance
$ 5,290.00
Unfavourable-U
Variable Overhead Efficiency Variance
(
Standard Hours
-
Actual Hours
)
x
Standard Rate
(
9950
-
10580
)
x
$ 4.30
-2709
Variance
$ 2,709.00
Unfavourable-U
---Requirement 1
Material Price Variance
(
Standard Rate
-
Actual Rate
)
x
Actual Quantity
(
$ 2.50
-
$ 2.20
)
x
9300
2790
Variance
$ 2,790.00
Favourable-F
Material Quantity Variance
(
Standard Quantity
-
Actual Quantity
)
x
Standard Rate
(
7800
-
9300
)
x
$ 2.50
-3750
Variance
$ 3,750.00
Unfavourable-U
----Requirement 2
Labor Rate Variance
(
Standard Rate
-
Actual Rate
)
x
Actual Labor Hours
(
$ 6.00
-
$ 7.00
)
x
200
-200
Variance
$ 200.00
Unfavourable-U
Labour Efficiency Variance
(
Standard Hours
-
Actual Hours
)
x
Standard Rate
(
300
-
200
)
x
$ 6.00
600
Variance
$ 600.00
Favourable-F
A
No. of units manufactured
19,900 units
B
Standard labor time per unit
30 minutes = 0.5 hours
C = A x B
Total Standard hours of labor time allowed
9,950 hours
D
Standard direct labor rate per hour
$ 6.40
E = C x D
Total Standard direct labor cost
$ 63,680
F
Actual Direct labor cost
$ 65,596
G = E
Standard direct labor cost
$ 63,680
H = F – G
Total Variance – Unfavourable
$ 1,916
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.