Question

Required: 1. What is the standard labor-hours allowed (SH) to makes 20,000 Jogging Mates? 2. What is the standard labor cost allowed (SH × SR) to make 20,000 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 per direct labor-hour. During August, the company incurred $21,850 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month.

Answer 1

Answer:

1.6000 Hours

2. 102,000

3. $ 350 Unfav

4.$ 4250 Fav

5 a).  $ 3.80 per hour

b) . $ 1000 Fav

Explanation:

1:      

Std hours allowed per unit: 18 min    

Actual output: 20000 units    

Std hours allowed for actuaal output (20000*18/60)= 6000 Hours

2:      

Std labour hourrs allowed =6000 hours    

Std rate per hour: $ 17    

Std labor cost allowed: (6000 hours @17)=102,000  

3:      

Labour Spending Variancce: Std hours*Std rate - Actual hours*Actual rate

6000 *17 - 102350 = $ 350 Unfav  

4:      

Actual labour rate per hour (102350/5750): $ 17.80 per hour  

Labour Rate variance: Actual hours (Std rate-Actual rate)  

5750 hrs (17.00-17.80)= $ 4600 Unfav  

Labour efficiency variance: Std rate (Std hours-Actual hours)  

17 (6000-5750)= $ 4250 Fav  

5:      

Std Variable rate per hour: $ 4 per hour    

Actual rate per hour (21850/5750)= $ 3.80 per hour  

Variable rate variance: Actual hours (Std OH rate-Actual OH rate)  

5750 (4.00-3.80)= $ 1150 Fav  

Variable OH effience variance: Std rate (Std hours-Actual hours)  

4.00 (6000-5750)= $ 1000 Fav