Erie company manufactures a mobile fitness device called the jogging mate. the company uses standards to control its costs. the labor standards that have been set for one jogging mate are as follows: standard hours standard rate per hour standard cost 24 minutes $5.40 $2.16 during august, 8,390 hours of direct labor time were needed to make 19,600 units of the jogging mate. the direct labor cost totaled $43,628 for the month. required: 1. what is the standard labor-hours allowed (sh) to makes 19,600 jogging mates? 2. what is the standard labor cost allowed (sh × sr) to make 19,600 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 $4.30 per direct labor-hour. during august, the company incurred $41,950 in variable manufacturing overhead cost. compute the variable overhead rate and efficiency variances for the month.

Provided Information

Standard Hours = 24 minutes per unit

that means 5 units in 2 hours

Standard Cost = $5.40 per hour

Actual labor hours = 8,390

Actual Cost = $43,628

Actual production = 19,600 units

1. Standard labor Hours for actually produced = (19,600/5) 2 = 7,840 hours

2. Standard Labor Cost = 7,840 $5.40 = $42,336

3. Labor Spending Variance = Standard Cost - Actual Cost

= $42,336 - $43,628 = - $1,292 Unfavorable

4. Labor Rate Variance = (Standard Rate - Actual Rate) Actual Hours

= ($5.40 - (43,628/8,390)) 8,390

= (5.40 -  5.2) 8,390 = $1,678 Favorable

Labor Efficiency Variance = (Standard Hours - Actual Hours) Actual Rate

= (7,840 - 8,320) $5.20

= - $2,496 Unfavorable

5. Standard Rate of overhead = $4.30 per hour

Actual Overhead Rate = $41,950/8,390 = $5

Overhead Efficiency Variance = (Standard Hours - Actual Hours) Standard Rate

= (7,840 - 8,390) $4.30 = - $2,365 Unfavorable

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