Reference no: EM132736866

Bob's Company manufactures an Radio player called the Boombox. The company uses standards to control its costs. The labour and variable overhead standards that have been set for one Boombox Radio player are as follows:

                        Standard Hours             Standard Rate per Hour                Standard Cost

Direct labour         18minutes               $13.50                                        $4.05

Variable overhead    18minutes               $4.00                                            $1.20

Budgeted fixed overhead was estimated to be $24,975 per month. Fixed overhead cost is applied using direct labour-hours. During August, 5,000 hours of direct labour time was recorded in the manufacture of 17,500 units of the Boombox. The direct labour cost totalled $77,075 for the month. Actual variable overhead and fixed overhead costs were $19,000 and $28,000, respectively.

Required:

Problem 1-a. What direct labour cost should have been incurred in the manufacture of the 17,500 units of the Boombox? (Do not round intermediate calculations.)

Problem 1-b. Calculate the total direct labor cost variance? (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)

Problem 2. Calculate the labour rate variance and labour efficiency variance?