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12 April, 23:11

Erie company manufactures a small mp3 player called the jogging mate. the company uses standards to control its costs. the labor standards that have been set for one jogging mate mp3 player are as follows: standard hours standard rate per hour standard cost 18 minutes $12.00 $3.60 during august, 5,750 hours of direct labor time were needed to make 20,000 units of the jogging mate. the direct labor cost totaled $73,600 for the month. required: 1. according to the standards, what direct labor cost should have been incurred to make 20,000 units of the jogging mate? by how much does this differ from the cost that was incurred? (round standard labor time per unit to 2 decimal places.)

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  1. 13 April, 01:26
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    To be able to calculate the required values clearly, first let us define the variables one by one.

    Number of units manufactured = 20,000 units

    Standard hours per unit = 18 minutes / unit = 0.3 hours / unit

    Total standard hours = 20,000 units * (0.3 hours / unit)

    Total standard hours = 6,000 hours

    Standard rate per hour = $12 / hour

    Total standard rate = ($12 / hour) * 6,000 hours

    Total standard rate = $72,000

    Total standard rate = Standard labor cost

    Actual direct labor cost is $73,600, therefore there was an excess of $1,600. The variance is unfavorable.
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