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Item $20$

Affordable Electronics Inc. manufactures medium$-$quality, reasonably priced wireless speakers for home use. The company uses standards to control its costs. The labour standards that have been set for one speaker are as follows:

Standard Hours Standard Rate

per Hour Standard

Cost

$12$ minutes $(0\mathrm{.}20$ hours$)$ $$10\mathrm{.}00$ $$2\mathrm{.}00$

During July, $2,150$ hours of direct labour time were recorded to make $10,000$ units. The direct labour cost totalled $$21,070$ for the month.

Required:

$1-$a$.$ What direct labour cost should have been incurred to make the $10,000$ speakers? $($Do not round intermediate calculations.$)$

$1-$b$.$ 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$).)$

$2.$ 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$).)$

$3.$ The budgeted variable manufacturing overhead rate is $$3\mathrm{.}00$ per direct labour$-$hour. During July, the company incurred $$6,880$ 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$).)$