Reference no: EM132792527

Erie Company manufactures a small MP3 player called the Jogging Mate. The company uses standards to control its costs. The labour standards that have been set for one Jogging Mate MP3 player are as follows:

Standard hour          Standard rate per hour             Standard cost

15 minutes                           £ 9.00                                 £ 2.25

During August, 4,800 hours of direct labour time were recorded in the manufacture of 20,000 units of the Jogging Mate. The direct labour cost totalled £50,400 for the month.

Required:

Problem 1. The budgeted variable manufacturing overhead rate is £5 per direct labour hour. During August, the company incurred £23,040 in variable manufacturing overhead cost. Compute the variable overhead spending and efficiency variances for the month. (Do not round your intermediate calculations.)