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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Business

Gracelyn Crane

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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Esther · Answer 1

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.