Chapter 10 Homework, Part 1
Exercise 10-11 Labour and Variable Manufacturing Overhead Variances [LO3, LO4]
Affordable Electronics Inc. manufactures medium-quality, reasonably priced wireless speakers for home use. The company uses standards to control its costs. The labour standards that have been set for one speaker are as follows:
Standard Rate: $19.00 per Hour
Standard Hours: 12 minutes (0.20 hours)
Cost: $3.80
During July, 3,850 hours of direct labour time were recorded to make 18,000 units. The direct labour cost totaled $74,305 for the month.
1-a. What direct labour cost should have been incurred to make the 18,000 speakers? (Do not round intermediate calculations.)
Required:
Direct labour cost
1-b. By how much does direct labour cost differ from the cost that was incurred? (Indicate the effect of variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).
Total variance