Exercise 10-4 Direct Labor and Variable Manufacturing Overhead Variances [L010-2
ID: 2561146 • Letter: E
Question
Exercise 10-4 Direct Labor and Variable Manufacturing Overhead Variances [L010-2, L010-3] 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 Standar Cost Rate Hours per 30 minutes $5.40 $2.70 s of direct labor time were needed to make 19,500 units of the Jogging Mate. The direct labor cost totaled $54,132 for the month. Required . What is the standard labor-hours allowed (SH) to makes 19,500 Jogging Mates? 2 what is the standard labor cost allowed (SH × SR) to make 19,500 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 $56.214 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 veriance by selecting "Fl" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate celculations.) 2. ard labor cost allowed Labor spending varianceExplanation / Answer
Standard Labour Hours = Standard Hours * Output in Units Standard Hours = 30 Minutes = 0.5 Hours Output in Units = 19500 Standard Labour Hours = 0.5 * 19500 = 9750 Standard Labour Cost Allowed = Standard Cost * Units of Output Standard Cost = $2.70 Output in Units = 19500 Standard Labour Cost Allowed = $2.70 * 19500 = 52650 Labor Rate variance AR (a) SR (b) Variance (c=b-a) AH (d) Total variance (e=c*d) F/U Labor Rate variance = (AR-SR)*AH AR = Actual Rate per hour = $54132 / 9750 = $5.552 SR = Standard Rate per hour = $5.40 AH = Actual hours = 10,410 F= Favourable U = Unfavourable Labor Rate variance AR (a) SR (b) Variance (c=b-a) AH (d) Total variance (e=c*d) F/U $ 5.55 $ 5.40 -0.15 10410 -1582.32 U Labor Efficiency variance AH (a) SH (b) Variance (c=b-a) AR (d) Total variance (e=c*d) F/U Labor Efficiency variance = (AH-SH)*AR AH = Actual hours = 10,410 SH = Standard Hours = 9750 SR = Standard Rate per hour = $5.40 F= Favourable U = Unfavourable Labor Efficiency variance AH (a) SH (b) Variance (c=b-a) SR (d) Total variance (e=c*d) F/U 10,410 9,750 -660 $ 5.40 -3,564 U Total Labor variance Total Actual Total Std Total variance F/U 57,796 52,650 -5,146 U (5.552 * 10410) (5.40 * 9750) VOH spending (rate) variance AR (a) SR (b) Variance (c=b-a) AH (d) Total variance (e=c*d) F/U VOH spending variance = (AR-SR)*AH AR = Actual Rate per hour = $56,214 / 10,410 = $5.40 SR = Standard Rate per hour = $4.50 AH = Actual hours = 10,410 F= Favourable U = Unfavourable VOH spending (rate) variance AR (a) SR (b) Variance (c=b-a) AH (d) Total variance (e=c*d) F/U $ 5.40 $ 4.50 -0.9 10410 -9369 U VOH efficiency variance AH (a) SH (b) Variance (c=b-a) SR (d) Total variance (e=c*d) F/U VOH efficiency variance = (AH-SH)*SR AH = Actual hours = 10,410 SH = Standard Hours = 9,750 SR = Standard Rate per hour = $4.50 F= Favourable U = Unfavourable VOH efficiency variance AH (a) SH (b) Variance (c=b-a) Price (d) Total variance (e=c*d) F/U 10,410 9,750 -660 $ 4.50 -2,970 U Total VOH variance Total Actual Total Std Total variance F/U 56,214 43,875 -12,339 U (5.40 * 10,410) (4.50 * 9,750) As per the Chegg rules, only the first question can be answered, if there is more than 1 question which is not inter related. So, I am sorry for not providing the answer for second question.
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