Erie Company manufactures a mobile fitness device called the Jogging Mate. The company's labor standards for one Jogging Mate are as follows:
Standard HoursStandard Rate per HourStandard Cost24 minutes$ 5.60$ 2.24
During August, 8,370 hours of direct labor time were needed to make 19,600 units of the Jogging Mate. The direct labor cost totaled $46,035 for the month.
Required:
What is the standard labor-hours allowed (SH) to makes 19,600 Jogging Mates?
What is the standard labor cost allowed (SH × SR) to make 19,600 Jogging Mates?
What is the labor spending variance?
What are the labor rate variance and the labor efficiency variance?
The budgeted variable manufacturing overhead rate is $4.30 per direct labor-hour. During August, the company incurred $38,502 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month.