Reference no: EM132510280

Affordable Electronics Inc. manufactures medium-quality, reasonably priced DVD players. The company uses standards to control its costs. The labour standards that have been set for one player are as follows:

Standard Hours = 12 minutes (0.20 hours)

Standard Rate per Hour = $11.00

Standard Cost = $2.20

• During July, 2,350 hours of direct labour time were recorded to make 11,000 units. The direct labour cost totalled $25,145 for the month.

Required:

Question 1: What direct labour cost should have been incurred to make the 11,000 DVD players? (Do not round intermediate calculations.)

Question 2: By how much does direct labour cost differ from the cost that was incurred? (Indicate the effect of variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)

Question 3: Break down the difference in cost from requirement 1-b above into a labour rate variance and a labour efficiency variance. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)

Question 4: The budgeted variable manufacturing overhead rate is $2.00 per direct labour-hour. During July, the company incurred $4,935 in variable manufacturing overhead cost. Compute the variable overhead spending and efficiency variances for the month. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).