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 HoursStandard Rate
per HourStandard
Cost18 minutes (0.30 hours)$11.00$3.30
During July, 6,850 hours of direct labour time were recorded to make 22,000 units. The direct labour cost totalled $80,145 for the month.
Required:
1-a. What direct labour cost should have been incurred to make the 22,000 speakers?
Note: Do not round intermediate calculations.
1-b. By how much does direct labour cost differ from the cost that was incurred?
Note: Input all amounts as positive values. Indicate the effect of variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).
Break down the difference in cost from requirement 1-b above into a labour rate variance and a labour efficiency variance.
Note: Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).
The budgeted variable manufacturing overhead rate is $3.00 per direct labour-hour. During July, the company incurred $18,495 in variable manufacturing overhead cost. Compute the variable overhead spending and efficiency variances for the month.
Note: Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).
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