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Exercise 10-4 (Algo) Direct Labor and Variable Manufacturing Overhead Variances [LO10-2, LO10-3] Erie Company manufactures...

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Accounting

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's labor standards for one Jogging Mate are as follows:

Standard Hours Standard Rate per Hour Standard Cost
27 minutes $ 6.20 $ 2.79

During August, 9,385 hours of direct labor time were needed to make 19,500 units of the Jogging Mate. The direct labor cost totaled $56,310 for the month.

Required:

  1. 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 are the labor rate variance and the labor efficiency variance?
  5. The budgeted variable manufacturing overhead rate is $4.30 per direct labor-hour. During August, the company incurred $46,925 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month.
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