The following standards for variable
overhead have been established for a company that makes only one product:

Standard hours per unit
of output

6.0

hours

Standard variable
overhead rate

$14.00

per hour

The following data pertain to
operations for the last month:

Actual hours

9,500

hours

Actual total variable
overhead cost

$125,150

Actual output

1,570

units

Required:

a.

What is the variable overhead rate
variance for the month? (Input the amount as a positive value. Leave
no cells blank – be certain to enter “0” wherever required.
Indicate the effect of each variance by selecting “F” for
favorable, “U” for unfavorable, and “None” for no effect
(i.e., zero variance). Omit the “$” sign in your response.)

Variable overhead rate
variance

$

(Click to select)
F
U
None

b.

What is the variable overhead
efficiency variance for the month? (Input the amount as a positive value.
Leave no cells blank – be certain to enter “0” wherever required.
Indicate the effect of each variance by selecting “F” for
favorable, “U” for unfavorable, and “None” for no effect
(i.e., zero variance). Omit the “$” sign in your response.)

Variable overhead
efficiency variance

$

(Click to select)
F
U
None

The following labor standards have
been established for a particular product:

Standard labor hours per
unit of output

4.4

hours

Standard labor rate

$20.20

per hours

The following data pertain to
operations concerning the product for the last month:

Actual hours worked

7,000

hours

Actual total labor cost

$142,100

Actual output

1,500

units

Required:

a.

What is the labor rate variance for
the month?(Input the amount as a positive value. Leave no cells
blank – be certain to enter “0” wherever required. Indicate the
effect of each variance by selecting “F” for favorable,
“U” for unfavorable, and “None” for no effect (i.e., zero
variance). Omit the “$” sign in your response.)

Labor rate variance

$

(Click to select)
F
U
None

b.

What is the labor efficiency variance
for the month?(Input the amount as a positive value. Leave no cells
blank – be certain to enter “0” wherever required. Indicate the
effect of each variance by selecting “F” for favorable,
“U” for unfavorable, and “None” for no effect (i.e., zero
variance). Omit the “$” sign in your response.)

Labor efficiency variance

$

(Click to select)
F
U
None

Silmon Corporation makes a product
with the following standard costs:

Standard Quantity
or Hours

Standard Price
or Rate

Direct materials

5.6

grams

$

5.00

per gram

Direct labor

0.5

hours

$

12.00

per hour

Variable overhead

0.5

hours

$

2.00

per hour

In June the company produced 4,900
units using 28,690 grams of the direct material and 2,650 direct labor-hours.
During the month the company purchased 24,800 grams of the direct material at
a price of $4.80 per gram. The actual direct labor rate was $12.60 per hour
and the actual variable overhead rate was $1.90 per hour. The materials price
variance is computed when materials are purchased. Variable overhead is
applied on the basis of direct labor-hours.

Required:

Compute the following variances for
raw materials, direct labor, and variable overhead, assuming that the price
variance for materials is recognized at point of purchase:(Input all amounts
as positive values. Do not round intermediate calculations. Leave no
cells blank – be certain to enter “0” wherever required. Indicate
the effect of each variance by selecting “F” for favorable,
“U” for unfavorable, and “None” for no effect (i.e., zero
variance). Omit the “$” sign in your response.)

a.

Direct materials quantity
variance

$

(Click to select)
F
U
None

b.

Direct materials price variance

$

(Click to select)
F
U
None

c.

Direct labor efficiency
variance

$

(Click to select)
F
U
None

d.

Direct labor rate variance

$

(Click to select)
F
U
None

e.

Variable overhead efficiency
variance

$

(Click to select)
F
U
None

f.

Variable overhead rate variance

$

(Click to select)
F
U
None

The following materials standards
have been established for a particular product:

Standard quantity per
unit of output

4.7

grams

Standard price

$13.00

per grams

The following data pertain to operations
concerning the product for the last month:

Actual materials
purchased

3,600

grams

Actual cost of materials
purchased

$ 41,940

Actual materials used in
production

2,900

grams

Actual output

550

units

The direct materials purchases
variance is computed when the materials are purchased.

Required:

a.

What is the materials price variance
for the month?(Input the amount as a positive value. Leave no cells
blank – be certain to enter “0” wherever required. Indicate the
effect of each variance by selecting “F” for favorable,
“U” for unfavorable, and “None” for no effect (i.e., zero
variance). Omit the “$” sign in your response.)

Materials price variance

$

(Click to select)
F
U
None

b.

What is the materials quantity variance
for the month? (Input the amount a as positive value. Leave no cells
blank – be certain to enter “0” wherever required. Indicate the
effect of each variance by selecting “F” for favorable,
“U” for unfavorable, and “None” for no effect (i.e., zero
variance). Omit the “$” sign in your response.)

Materials quantity
variance

$

(Click to select)
F
U
None

The Maxwell Corporation has a
standard costing system in which variable manufacturing overhead is assigned
to production on the basis of standard machine-hours. The following data are
available for July:

• Actual variable manufacturing
overhead cost incurred: $25,260

• Actual machine-hours worked: 2,800
hours

• Variable overhead rate variance:
$5,220 Unfavorable

• Total variable overhead spending
variance: $7,260 Unfavorable

The variable overhead efficiency
variance for July is:

A manufacturing company that has only
one product has established the following standards for its variable
manufacturing overhead. Variable manufacturing overhead standards are based
on machine-hours.

Standard hours per unit
of output

5.40

machine-hours

Standard variable
overhead rate

$11.67

per machine-hour

The following data pertain to
operations for the last month:

Actual hours

8,900

machine-hours

Actual total variable
manufacturing overhead cost

$95,880

Actual output

1,500

units

What is the variable overhead
efficiency variance for the month?

The following labor standards have
been established for a particular product:

Standard labor-hours per
unit of output

9.2

hours

Standard labor rate

$16.10

per hour

The following data pertain to
operations concerning the product for the last month:

Actual hours worked

11,300

hours

Actual total labor cost

$179,105

Actual output

1,800

units

What is the labor rate variance for
the month?

The Fischer Corporation uses a
standard costing system. The following data have been assembled for December:

Actual direct labor-hours
worked

5,200

hours

Standard direct labor
rate

$12

per hour

Labor efficiency variance

$3,000

unfavorable

The standard hours allowed for
December’s production is:

Krizum Industries makes heavy
construction equipment. The standard for a particular crane calls for 24
direct labor-hours at $16 per direct labor-hour. During a recent period 1,500
cranes were made. The labor rate variance was zero and the labor efficiency
variance was $5,600 unfavorable. How many actual direct labor-hours were
worked?

Blue Corporation’s standards call for
3,200 direct labor-hours to produce 1,600 units of product. During May 1,450
units were produced and the company worked 1,500 direct labor-hours. The
standard hours allowed for May production would be:

The Wright Company has a standard
costing system. The following data are available for September:

Actual quantity of direct
materials purchased

50,000

pounds

Standard price of direct
materials

$5

per pound

Material price variance

$5,000

unfavorable

Material quantity
variance

$3,500

favorable

The actual price per pound of direct
materials purchased in September is:(Round your answer to 2 decimal
places.)

Holtrop Corporation has received a
request for a special order of 9,100 units of product Z74 for $46.60 each.
The normal selling price of this product is $51.70 each, but the units would
need to be modified slightly for the customer. The normal unit product cost of
product Z74 is computed as follows:

Direct materials

$17.40

Direct labor

6.70

Variable manufacturing
overhead

3.90

Fixed manufacturing
overhead

6.80

Unit product cost

$34.80

Direct labor is a variable cost. The
special order would have no effect on the company’s total fixed manufacturing
overhead costs. The customer would like some modifications made to product
Z74 that would increase the variable costs by $6.30 per unit and that would
require a one-time investment of $46,100 in special molds that would have no
salvage value. This special order would have no effect on the company’s other
sales. The company has ample spare capacity for producing the special order.

Required:

Determine the effect on the company’s
the incremental net operating income of accepting the special order.(Omit the
“$” sign in your response.)

Incremental net operating
income

$

Humes Corporation makes a range of
products. The company’s predetermined overhead rate is $17 per direct
labor-hour, which was calculated using the following budgeted data:

Variable manufacturing
overhead

$

80,000

Fixed manufacturing overhead

$

260,000

Direct labor-hours

20,000

Management is considering a special
order for 710 units of product J45K at $65 each. The normal selling price of
product J45K is $76 and the unit product cost is determined as follows:

Direct materials

$

38.00

Direct labor

17.00

Manufacturing overhead
applied

17.00

Unit product cost

$

72.00

If the special order were accepted,
normal sales of this and other products would not be affected. The company
has ample excess capacity to produce the additional units. Assume that direct
labor is a variable cost, variable manufacturing overhead is really driven by
direct labor-hours, and total fixed manufacturing overhead would not be affected
by the special order.

Required:

If the special order were accepted,
what would be the impact on the company’s overall profit?(Input the amount
as a positive value. Round your intermediate calculations to 2 decimal places
and final answer to the nearest dollar amount. Omit the “$” sign in
your response.)

Total (Click to select)
decrease
increase
in
profit

$

Sohr Corporation processes sugar
beets that it purchases from farmers. Sugar beets are processed in batches. A
batch of sugar beets costs $43 to buy from farmers and $14 to crush in the
company’s plant. Two intermediate products, beet fiber and beet juice, emerge
from the crushing process. The beet fiber can be sold as is for $19 or
processed further for $18 to make the end product industrial fiber that is
sold for $51. The beet juice can be sold as is for $34 or processed further
for $22 to make the end product refined sugar that is sold for $51.

How much more profit (loss) does the
company make by processing the intermediate product beet juice into refined
sugar rather than selling it as is?

Brown Corporation makes four products in a single
facility. These products have the following unit product costs:

Products

A

B

C

D

Direct materials

$17.10

$21.00

$14.00

$16.70

Direct labor

19.10

22.50

16.90

10.90

Variable manufacturing
overhead

5.90

7.10

9.60

6.60

Fixed manufacturing
overhead

29.00

15.90

16.00

18.00

Unit product cost

$71.10

$66.50

$56.50

$52.20

Products

A

B

C

D

Grinding minutes per unit

2.20

1.25

0.80

1.10

Selling price per unit

$86.20

$78.60

$75.40

$70.10

Variable selling cost per
unit

$2.85

$3.55

$4.30

$5.00

Monthly demand in units

4,500

3,500

3,500

5,500.00

The grinding machines are potentially the constraint in
the production facility. A total of 10,500 minutes are available per month on
these machines. Direct labor is a variable cost in this company.

Broze Company makes four products in
a single facility. These products have the following unit product costs:

Products

A

B

C

D

Direct materials

$14.90

$10.80

$11.60

$11.20

Direct labor

20.00

28.00

34.20

41.00

Variable manufacturing
overhead

4.90

3.30

3.20

3.80

Fixed manufacturing
overhead

27.10

35.40

27.20

37.80

Unit product cost

$66.90

$77.50

$76.20

$93.80

Additional data concerning these products
are listed below.

Products

A

B

C

D

Grinding minutes per unit

4.40

5.90

4.90

4.00

Selling price per unit

$76.70

$94.10

$88.00

$104.80

Variable selling cost per
unit

$2.80

$1.80

$3.90

$2.20

Monthly demand in units

4,600

4,600

3,600

2,600

The grinding machines are potentially
the constraint in the production facility. A total of 54,200 minutes are
available per month on these machines.

Direct labor is a variable cost in
this company.

How many minutes of grinding machine
time would be required to satisfy demand for all four products?

Eley Corporation produces a single product. The cost of
producing and selling a single unit of this product at the company’s normal
activity level of 52,000 units per month is as follows:

Direct materials

$48.60

Direct labor

$9.30

Variable manufacturing
overhead

$2.30

Fixed manufacturing
overhead

$19.70

Variable selling &
administrative expense

$4.20

Fixed selling &
administrative expense

$20

The normal selling price of the
product is $110.10 per unit.

An order has been received from an overseas customer
for 3,200 units to be delivered this month at a special discounted price.
This order would have no effect on the company’s normal sales and would not
change the total amount of the company’s fixed costs. The variable selling
and administrative expense would be $2.40 less per unit on this order than on
normal sales.

Direct labor is a variable cost in
this company.

Suppose there is ample idle capacity to produce the
units required by the overseas customer and the special discounted price on
the special order is $88.40 per unit. By how much would this special order
increase (decrease) the company’s net operating income for the month?

The management of Freshwater Corporation
is considering dropping product C11B. Data from the company’s accounting
system appear below:

Sales

$929,000

Variable expenses

$408,500

Fixed manufacturing
expenses

$343,000

Fixed selling and
administrative expenses

$250,000

All fixed expenses of the company are
fully allocated to products in the company’s accounting system. Further
investigation has revealed that $210,500 of the fixed manufacturing expenses
and $121,500 of the fixed selling and administrative expenses are avoidable
if product C11B is discontinued.

What would be the effect on the
company’s overall net operating income if product C11B were dropped?

Tawstir Corporation has 300 obsolete
personal computers that are carried in inventory at a total cost of $432,000.
If these computers are upgraded at a total cost of $120,000, they can be sold
for a total of $180,000. As an alternative, the computers can be sold in
their present condition for $30,000.

What is the net advantage or
disadvantage to the company from upgrading the computers rather than selling
them in their present condition?

Consider the following production and
cost data for two products, L and C:

Product L

Product C

Contribution margin per
unit

$24

$18

Machine-hours needed per
unit

2 hours

1 hours

The company can only perform 10,000
machine hours each period, due to limited skilled labor and there is
unlimited demand for each product. What is the largest possible total
contribution margin that can be realized each period?

A customer has requested that Inga
Corporation fill a special order for 2,800 units of product K81 for $32 a
unit. While the product would be modified slightly for the special order,
product K81’s normal unit product cost is $17.70:

Direct materials

$ 5.20

Direct labor

3.00

Variable manufacturing
overhead

2.30

Fixed manufacturing
overhead

7.20

Unit product cost

$17.70

Direct labor is a variable cost. The
special order would have no effect on the company’s total fixed manufacturing
overhead costs. The customer would like modifications made to product K81
that would increase the variable costs by $1.30 per unit and that would
require an investment of $16,000 in special molds that would have no salvage
value.

This special order would have no
effect on the company’s other sales. The company has ample spare capacity for
producing the special order. If the special order is accepted, the company’s
overall net operating income would increase (decrease) by:

Wiacek Corporation has received a request for a special
order of 4,200 units of product F65 for $26.80 each. Product F65’s unit
product cost is $26.20, determined as follows:

Direct materials

$2.50

Direct labor

7.80

Variable manufacturing
overhead

6.90

Fixed manufacturing
overhead

9.00

Unit product cost

$26.20

Direct labor is a variable cost. The special order
would have no effect on the company’s total fixed manufacturing overhead
costs. The customer would like modifications made to product F65 that would
increase the variable costs by $3.20 per unit and that would require an
investment of $21,000 in special molds that would have no salvage value.

This special order would have no effect on the
company’s other sales. The company has ample spare capacity for producing the
special order. If the special order is accepted, the company’s overall net
operating income would increase (decrease) by:

Farnsworth Television makes and sells
portable television sets. Each television regularly sells for $270. The
following cost data per television are based on a full capacity of 15,500
televisions produced each period:

Direct materials

$60

Direct labor

$40

Manufacturing overhead
(70% variable, 30% unavoidable fixed)

$40

A special order has been received by
Farnsworth for a sale of 2,600 televisions to an overseas customer. The only
selling costs that would be incurred on this order would be $11 per
television for shipping. Farnsworth is now selling 7,600 televisions through
regular distributors each period. What should be the minimum selling price
per television in negotiating a price for this special order?

Barrus Corporation makes 39,000
motors to be used in the productions of its power lawn mowers. The average
cost per motor at this level of activity is as follows:

Direct materials

$9.80

Direct labor

$8.80

Variable manufacturing
overhead

$3.60

Fixed manufacturing
overhead

$4.55

This motor has recently become
available from an outside supplier for $24.85 per motor. If Barrus decides
not to make the motors, none of the fixed manufacturing overhead would be
avoidable and there would be no other use for the facilities. If Barrus
decides to continue making the motor, how much higher or lower will the
company’s net operating income be than if the motors are purchased from the
outside supplier? Assume that direct labor is a variable cost in this company.

The management of Heider Corporation
is considering dropping product H58S. Data from the company’s accounting
system appear below:

Sales

$980,000

Variable expenses

$394,000

Fixed manufacturing
expenses

$376,000

Fixed selling and
administrative expenses

$256,000

In the company’s accounting system
all fixed expenses of the company are fully allocated to products. Further
investigation has revealed that $245,000 of the fixed manufacturing expenses
and $206,000 of the fixed selling and administrative expenses are avoidable
if product H58S is discontinued. What would be the effect on the company’s
overall net operating income if product H58S were dropped?

Fabio Corporation is considering
eliminating a department that has a contribution margin of $29,000 and
$71,000 in fixed costs. Of the fixed costs, $13,500 cannot be avoided. The
effect of eliminating this department on Fabio’s overall net operating income
would be: