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 $5.80 $2.32 During August, 8,550 hours of direct labor time were needed to make 19,400 units of the Jogging Mate. The direct labor cost totaled $48,735 for the month. Required: 1. What is the standard labor-hours allowed (SH) to makes 19,400 Jogging Mates? 2. What is the standard labor cost allowed (SH * SR) to make 19,400 Jogging Mates? 3. What is the labor spending variance? 4. What is the labor rate variance and the labor ef

Instructions are below.

Explanation:

Giving the following information:

Standard Hours = 24 minutes (0.4)

Standard Rate per Hour=$5.8

Standard Cost = $2.32 per unit

During August, 8,550 hours of direct labor time were needed to make 19,400 units of the Jogging Mate.

The direct labor cost totaled $48,735 for the month.

First, we need to calculate the standard hours allowed to produce 8,550 units.

Standard hours = 19,400*0.4 = 7,760 hours

Now, we can calculate the standard cost:

Standard cost = 7,760*5.8 = $45,008

Finally, to calculate the direct labor efficiency and rate variance, we need to use the following formulas:

Direct labor time (efficiency) variance = (Standard Quantity - Actual Quantity) * standard rate

Direct labor time (efficiency) variance = (7,760 - 8,550) * 5.8

Direct labor time (efficiency) variance = $4,582 unfavorable

Direct labor rate variance = (Standard Rate - Actual Rate) * Actual Quantity

Actual rate = 48,735/8,550 = $5.7

Direct labor rate variance = (5.8 - 5.7) * 8,550

Direct labor rate variance = $855 favorable