STANDARD COSTS homework questions

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Description

229. A
________________ is expressed as a unit amount, whereas a _________________ is
expressed as a total amount.

230. Standards which represent optimum
performance under perfect operating conditions are called _______________
standards, but most companies use _________________ standards which are
rigorous but attainable.

231. In developing a standard cost for direct
materials used in making a product, consideration should be given to two
factors: (1) __________________ per unit
of direct materials and (2) the __________________ of direct materials to
produce one unit of product.

232. The difference between actual hours times
the actual pay rate and actual hours times the standard pay rate is the labor
_________________ variance.

233. The standard number of hours allowed times
the predetermined overhead rate is the amount of ________________ to the
products produced.

234. The difference between actual quantity of
materials times the standard price and standard quantity times the standard
price is the materials ________________ variance.

235. If the actual direct labor hours worked is
greater than the standard hours, the labor quantity variance will be
___________________, and the labor rate variance will be ____________________
if the standard rate of pay is greater than the actual rate of pay.

236. In using variance reports, top management
normally looks for _________________ variances.

a237. A two-variance approach to analyzing
overhead variances requires the calculation of the overhead _________________
variance and the overhead ________________ variance.

a238. The overhead ______________ variance is the
difference between normal capacity hours and standard hours allowed times the
fixed overhead rate.

MATCHING

239. Match the items in the two columns below by
entering the appropriate code letter in the space provided.

A. Variances F. Materials price variance

B. Standard costs G. Labor quantity variance

C. Standard cost accounting system aH. Overhead controllable variance

D. Normal standards aI. Overhead volume variance

E. Ideal standards J. Standard hours allowed

____ 1. The difference between actual overhead
incurred and overhead budgeted for the standard hours allowed.

____ 2. The hours that should have been worked for the
units produced.

____ 3. The difference between the actual quantity
times the actual price and the actual quantity times the standard price.

____ 4. The difference between total actual costs and
total standard costs.

____ 5. The difference between actual hours times the
standard rate and standard hours times the standard rate.

____ 6. Predetermined unit costs that are measures of
performance.

____ 7. The difference between normal capacity hours
and standard hours allowed times the fixed overhead rate.

____ 8. Standards based on an efficient level of
performance that are attainable under expected operating conditions.

____ 9. Standards based on the optimum level of
performance under perfect operating conditions.

____ 10. A double-entry system of accounting in which
standard costs are used in making entries and variances are recognized in the
accounts.

A

SHORT-ANSWER ESSAY QUESTIONS

S-A E 240

(a) Explain the similarities and differences
between standards and budgets.

(b) Contrast the accounting for standard and budgets.

S-A E 241

Star Industries computes variances as a basis for
evaluating the performance of managers responsible for controlling costs. For
several months, the labor quantity variance has been unfavorable. Briefly
explain what could be causing the unfavorable labor quantity variance and
indicate what type of corrective action, if any, might be taken.


S-A E 242

In reviewing the activities of the Mixing
Department for the month of June, the manager of the department notices that
there was an unfavorable materials price variance for the month and there was an unfavorable materials quantity
variance. Under what circumstances, if any, can the responsibility for each
variance be placed on (a) the purchasing department and (b) the production
department?

S-A E 243

What are the four perspectives used in the
balanced scorecard? Discuss the nature of each, and how the perspectives are
linked.

S-A E 244 (Ethics)

Fulmar
Manufacturing Co. is the manufacturer of miniature models, especially of
automobiles with historical interest. The company is developing new standard
costs. Patrick Webb suggests that the new standards for materials should not
include any waste for liquid plastics that spill out of the molds. “After
all,” he says, “we’re trying to be a world class company. When we
build in waste, we tell the workers it’s okay to waste some.” Sharon Berry,
another manager, disagrees. “If we don’t allow for some normal human
error,” she says, “we’ll have a mighty unhappy work force. Also, I
think that these kinds of perfection standards exploit the workers. I certainly
wouldn’t want to be held up to perfection every day—what could I do but
fail?”


S-A E 244 (Cont.)

The argument
continued. Finally, the standards were prepared. All standards were prepared
according to normal expected performance, except that for materials, an ideal
standard was used.Sharon, still maintaining the unfairness of the system, refused to hold her
workers accountable for materials quantity variances.

Required:

1. Are
ideal standards unethical? Explain
briefly.

2. Is
it unethical forSharon to refuse to support the standards? Explain.

S-A E 245 (Communication)

Vincent Bassani
has come to the accounting department for help in interpreting his variance
report. He says that he understands that last month was not a very good one for
output, but he really thought everyone put forth good effort, so he is confused
about the existence of an unfavorable labor efficiency variance. He cites as an
example of the workers’ effort their willingness to work extra hours to get
full output, even when a whole week’s worth of production had to be scrapped.
He knew that his materials costs would be higher, and that overtime would make
his rate variance unfavorable, but he certainly didn’t think his workers had
been inefficient.

Required:

Write a short note toVincent explaining the probable cause of the unfavorable
labor efficiency variance.

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STANDARD COSTS homework questions

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Description

Ex. 221

Caroline, Inc. planned to produce 20,000 units of
product and work 100,000 direct labor hours in 2013. Manufacturing overhead at
the 100,000 direct labor hours level of activity was estimated to be:

Variable
manufacturing overhead $ 700,000

Fixed
manufacturing overhead 300,000

Total
manufacturing overhead $1,000,000

At the end of 2013, 19,000 units of
product were actually produced and 98,000 actual direct labor hours were
worked. Total actual overhead costs for 2013 were $935,000.

Instructions

(a) Compute the total overhead
variance.

a(b) Compute
the overhead controllable variance.

a(c) Compute
the overhead volume variance.


aEx. 222

Jackson Manufacturing planned to produce 20,000
units of product and work at the 60,000 direct labor hours level of activity
for 2013. Manufacturing overhead at this level of activity and the
predetermined overhead rate are as follows:

Predetermined

Overhead
Rate per

Direct
Labor Hour

Variable manufacturing overhead $300,000 $5

Fixed manufacturing overhead 120,000 2

Total manufacturing overhead $420,000 $7

At the end of 2013, 21,000 units were actually
produced and 61,500 direct labor hours were actually worked. Total actual
manufacturing overhead costs were $430,000.

Instructions

Using a two-variance analysis of manufacturing
overhead, calculate the following variances and indicate whether they are
favorable or unfavorable:

(a) Overhead controllable
variance.

(b) Overhead volume variance.

A

Ex. 223

Adam
Corporation prepared the following variance report.

ADAM CORPORATION

Variance
Report—Purchasing
Department

for
Week Ended January 9, 2013

Type of Quantity Actual Standard Price

Materials Purchased Price Price
Variance Explanation

Brown ?
lbs. $5.25 $5.00 $6,000 ? Price
increase

Green 8,000
oz. ?
3.25 1,600 U Rush
order

White 22,000
units $0.45 ? 660 F Bought
larger quantity

Ex. 223 (Cont.)

Instructions

Fill in the appropriate amounts or
letters for the question marks in the report.

Ex. 224

Pepper Industries uses a standard cost accounting
system. During March, 2013, the company reported the following manufacturing
variances:

Materials
price variance $1,600 F

Materials
quantity variance 2,400 U

Labor
price variance 600 U

Labor
quantity variance 2,200 U

Overhead
controllable 500 F

Overhead
volume 3,000 U

In addition, 15,000 units of product were sold at
$18 per unit. Each unit sold had a standard cost of $14. Selling and
administrative expenses for the month were $15,000.

Instructions

Prepare an
income statement for management for the month ending March 31, 2013.

aEx. 225

Howard, Inc.
developed the following standards for 2013:

Howard, Inc.

Standard Cost Card

Cost Elements Standard
Quantity
× Standard Price = Standard Cost

Direct materials 5 pounds $ 5 $25

Direct labor 1 hour $18 18

Manufacturing overhead 1 hour $10 10

$53

The company planned to produce 120,000 units of
product and work at the 120,000 direct labor level of activity in 2013. The
company uses a standard cost accounting system which records standard costs in
the accounts and recognizes variances in the accounts at the earliest
opportunity. During 2013, 116,000 actual units of product were produced.

Instructions

Prepare the journal entries to record the
following transactions for Howard, Inc. during 2013.

(a) Purchased
588,000 pounds of raw materials for $4.90 per pound on account.

(b) Actual
direct labor payroll amounted to $2,108,000 for 114,000 actual direct labor
hours worked. Factory labor cost is to be recorded and distributed to production.

(c) Direct
materials issued for production amounted to 588,000 pounds which actually cost
$4.90 per pound.

(d) Actual
manufacturing overhead costs incurred were $1,152,000 in 2013.

(e) Manufacturing
overhead was applied when the 116,000 units were completed.

(f) Transferred
the 116,000 completed units to finished goods.

aEx. 226

Presented below is a flexible manufacturing budget
for Ganem Manufacturing, which manufactures fine timepieces:

Activity
Index
:

Standard direct labor hours 2,800 3,200 3,600 4,000

Variable costs

Indirect
materials $ 5,600 $ 6,400 $ 7,200 $ 8,000

Indirect
labor 3,220 3,680 4,140 4,600

Utilities 7,280 8,320 9,360 10,400

Total
variable 16,100 18,400 20,700 23,000

Fixed costs

Supervisory
salaries 1,000 1,000 1,000 1,000

Rent 3,000 3,000 3,000 3,000

Total
fixed 4,000 4,000 4,000 4,000

Total costs $20,100 $22,400 $24,700 $27,000


aEx. 226 (Cont.)

The company applies the overhead on the basis of
direct labor hours at $7.00 per direct labor hour and the standard hours per
timepiece is 1/2 hour each. The company’s actual production was 5,400 timepieces
with 2,700 actual hours of direct labor. Normal capacity is 3,200 hours. Actual
overhead was $20,200.

Instructions

(a) Compute the controllable and volume overhead
variances.

a(b) Prepare
the entries for manufacturing overhead during the period and the entry to
recognize the overhead variances at the end of the period.

Ex. 227

The following information was taken from the
annual manufacturing overhead cost budget of Cinnamon Manufacturing:

Variable
manufacturing overhead costs $186,000

Fixed
manufacturing overhead costs $124,000

Normal
production level in direct labor hours 62,000

Normal
production level in units 31,000

During the year, 30,000 units were produced, 64,000
hours were worked, and the actual manufacturing overhead costs were $322,000.
The actual fixed manufacturing overhead costs did not deviate from the budgeted
fixed manufacturing overhead costs. Overhead is applied on the basis of direct
labor hours.

Ex. 227 (Cont.)

Instructions

(a) Compute the total, fixed, and
variable predetermined manufacturing overhead rates.

a(b) Compute
the total, controllable, and volume overhead variances.

Ex. 228

Monte Industries has a standard costing system. The
following data are available for July:

a. Actual manufacturing overhead cost incurred:
$22,000

b. Actual machine hours worked: 1,600

c. Overhead volume variance: $3,600 Unfavorable

d. Total overhead variance: $2,000 Unfavorable

e. Overhead is assigned to production on the
basis of machine hours

Instructions

Determine the amount of (1) the controllable
overhead variance and (2) the overhead applied.

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STANDARD COSTS homework questions

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Description

Ex. 211

Platt Company produces one product, a putter
called PAR-putter. Platt uses a standard cost system and determines that it
should take one hour of direct labor to produce one PAR-putter. The normal
production capacity for this putter is 100,000 units per year. The total
budgeted overhead at normal capacity is $500,000 comprised of $200,000 of
variable costs and $300,000 of fixed costs. Platt applies overhead on the basis
of direct labor hours.

During the current year, Platt produced 85,000
putters, worked 89,000 direct labor hours, and incurred variable overhead costs
of $160,000 and fixed overhead costs of $300,000.

Instructions

(a) Compute the predetermined variable overhead
rate and the predetermined fixed overhead rate.

(b) Compute the applied overhead for Platt for
the year.

(c) Compute the total overhead variance.

Ex. 212

Hector
Company has developed the following standard costs for its product for 2012:

HECTOR COMPANY

Standard Cost Card

Product A

Cost Element Standard
Quantity
× Standard Price = Standard Cost

Direct materials 4 pounds $3 $12

Direct labor 3 hours 8 24

Manufacturing overhead 3 hours 4 12

$48

The company
expected to produce 30,000 units of Product A in 2013 and work 90,000 direct
labor hours.

Actual
results for 2013 are as follows:

·
31,000
units of Product A were produced.

·
Actual
direct labor costs were $746,200 for 91,000 direct labor hours worked.

·
Actual
direct materials purchased and used during the year cost $346,500 for 126,000
pounds.

·
Actual
variable overhead incurred was $155,000 and actual fixed overhead incurred was
$205,000.

Instructions

Compute the following variances showing all
computations to support your answers. Indicate whether the variances are
favorable or unfavorable.

(a) Materials quantity variance.

(b) Total direct labor variance.

(c) Direct labor quantity
variance.

(d) Direct materials price
variance.

(e) Total overhead variance.

Ex. 213

Dart Company
developed the following standard costs for its product for 2013:

DART COMPANY

Standard Cost Card

Cost Elements Standard
Quantity
× Standard Price = Standard
Cost

Direct materials 4 pounds $ 5 $20

Direct labor 2 hours 10 20

Variable overhead 2 hours 4 8

Fixed overhead 2 hours 2 4

$52

The company expected to work at the 120,000 direct
labor hours level of activity and produce 60,000 units of product.

Actual
results for 2013 were as follows:

·
56,800
units of product were actually produced.

·
Direct
labor costs were $1,092,000 for 112,000 direct labor hours actually worked.

·
Actual
direct materials purchased and used during the year cost $1,108,800 for 231,000
pounds.

·
Total
actual manufacturing overhead costs were $680,000.

Ex. 213 (cont.)

Instructions

Compute the following variances for Dart Company
for 2013 and indicate whether the variance is favorable or unfavorable.

1. Direct
materials price variance.

2. Direct
materials quantity variance.

3. Direct
labor price variance.

4. Direct
labor quantity variance.

a5. Overhead
controllable variance.

a6. Overhead
volume variance.

Ans: N/A, LO: 4,5,10, Bloom: AN, Difficulty:
Medium, Min: 20, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA
FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management

Ex. 214

Flagstaff, Inc.
uses standard costing for its one product, baseball bats. The standards call
for 3 board-feet of wood at $1.40 per board-foot, and 45 minutes of work at $12
per hour per bat. Total manufacturing overhead costs were estimated at $9,450,
of which the variable portion was $0.50 per bat and the fixed portion was $1.00
per bat with an estimate of 6,300 bats to be produced. Flagstaff identifies
price variances at the earliest possible point in time.

During March, the company had the following
results:

Direct labor used
= 4,800 hours at a cost of $56,400

Actual
manufacturing overhead fixed costs = $6,000

Actual
manufacturing overhead variable costs = $3,100

Bats produced = 6,000

Instructions

Compute the following variances for March.

1. Labor quantity variance

2. Total labor variance

a3. Overhead controllable variance

a4. Overhead volume variance

Ex. 215

Prescott
Manufacturing manufactures widgets for distribution. The standard costs for the
manufacture of widgets follow:

Standard
Costs
Actual
Costs

Direct
materials 3 lbs. per widget
at 31,000 lbs. at
$34

$35
per pound per
pound

Direct
labor 2.5 hours per
widget 22,500 hours
at

at
$11 per hour $11.80
per hour

Factory
overhead Variable cost, $24/widget $241,500 variable cost

Fixed
cost, $40/widget $381,250
fixed cost


Ex. 215 (Cont.)

Budgeted factory
overhead was $640,000. Overhead applied is based on widgets produced. The
company estimated that 10,000 widgets would be produced; however, only 9,600 were
produced.

Instructions

Calculate the following amounts.

1. Rate
at which total factory overhead is applied

2. Materials
price variance

3. Total
materials variance

a4. Overhead volume variance

a5. Overhead controllable variance

Ex. 216

More Hits Company manufactures aluminum baseball
bats that it sells to university athletic departments. It has developed the
following per unit standard costs for 2013 for each baseball bat:

Manufacturing

Direct Materials Direct
Labor
Overhead

Standard Quantity 2
Pounds (Aluminum) 1/2 hour 1/2 hour

Standard Price $4.00 $10.00 $6.00

Unit Standard Cost $8.00 $5.00 $3.00

In 2013, the company planned to produce 120,000
baseball bats at a level of 60,000 hours of direct labor.


Ex. 216 (Cont.)

Actual
results for 2013 are presented below:

1. Direct materials purchases
were 246,000 pounds of aluminum which cost $1,020,900.

2. Direct materials used were 220,000
pounds of aluminum.

3. Direct labor costs were $575,260
for 58,700 direct labor hours actually worked.

4. Total manufacturing overhead
was $352,000.

5. Actual production was 114,000
baseball bats.

Instructions

(a) Compute
the following variances:

1. Direct
materials price.

2. Direct
materials quantity.

3. Direct
labor price.

4. Direct
labor quantity.

5. Total
overhead variance.

a(b) Prepare
the journal entries to record the transactions and events in 2013.

Ex. 217

The standard cost of Product 245 manufactured by Albert
Industries includes 2 pounds of direct materials at $4.00 per pound. During
September, 40,000 pounds of direct materials are purchased at a cost of $3.85
per pound, and all of the direct materials are used to produce 19,000 units of
Product 245.

Instructions

(a) Compute the materials price and quantity
variances.

a(b) Journalize
the purchase of the materials and the issuance of the materials, assuming a
standard cost system is used.

Ex. 218

Aztec, Inc.’s standard labor cost of producing
one unit of product is 2 hours at the rate of $14.00 per hour. During February,
52,000 hours of labor are incurred at a cost of $13.80 per hour to produce 25,000
units of product.

Instructions

(a) Compute the labor price and labor quantity
variances.

a(b) Journalize
the incurrence of the labor costs and the assignment of direct labor to
production, assuming a standard cost system is used.

Ex. 219

The following direct labor data pertain to the
operations of Murray Industries for the month of November:

Standard
labor rate $15.00
per hr.

Actual
hours incurred 9,000

The standard cost card shows that 2.5
hours are required to complete one unit of product. The actual labor rate
incurred exceeded the standard rate by 10%. Four thousand units were manufactured
in November.

Ex. 219 (Cont.)

Instructions

(a) Calculate the price, quantity,
and total labor variances.

a(b) Journalize the entries to record
the labor variances.

aEx. 220

North Coast
Manufacturing provided the following information about its standard costing
system for 2013:

Standard Data Actual
Data

Labor 2
hrs. @ $21 per hr. Produced 9,000 units

Budgeted fixed overhead $100,000 Labor
worked 17,000 hrs. costing $340,000

Budgeted variable overhead $30 per unit Actual
overhead $375,000

Budgeted production 10,000
units

North Coast applies fixed overhead at $10 per unit
produced.

Instructions

Determine the amounts of the overhead variances.

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Description

Ex 201

Sonic, Inc. is
planning to produce 2,500 units of product in 2013. Each unit requires
3 pounds of materials at $6 per pound and a half hour of labor at $16 per hour.
The overhead rate is 75% of direct labor.

Instructions

(a) Compute
the budgeted amounts for 2013 for direct materials to be used, direct labor,
and applied overhead.

(b) Compute the standard cost
of one unit of product.

Ex. 202

Pane Corp. manufactures and sells a
nutrition drink for children. It wants to develop a standard cost per gallon.
The following are required for production of a 100 gallon batch:

1,960 ounces
of lime Kool-Drink at $.12 per ounce

40 pounds of granulated
sugar at $.60 per pound

63 kiwi fruit at $.50
each

100 protein tablets at
$.90 each

4,000 ounces of water at
$.003 per ounce

Pane estimates that 2% of the lime Kool-Drink is
wasted, 20% of the sugar is lost, and 10% of the kiwis cannot be used.

Instructions

Compute the
standard cost of the ingredients for one gallon of the nutrition drink.

Ex. 203

Engines Done Right Co. is trying to
establish the standard labor cost of a typical engine tune-up. The following
data have been collected from time and motion studies conducted over the past
month.

Actual
time spent on the tune-up 1.0
hour

Hourly
wage rate $16

Payroll
taxes 10%
of wage rate

Setup
and downtime 10%
of actual labor time

Cleanup
and rest periods 20%
of actual labor time

Fringe
benefits 25%
of wage rate

Instructions

(a) Determine
the standard direct labor hours per tune-up

(b) Determine
the standard direct labor hourly rate.

(c) Determine
the standard direct labor cost per tune-up.

(d) If a
tune-up took 1.5 hours at the standard hourly rate, what was the direct labor
quantity variance?


Ex. 204

Riggins, Inc.
manufactures one product called tybos. The company uses a standard cost system
and sells each tybo for $8. At the start of monthly production, Riggins
estimated 9,500 tybos would be produced in March. Riggins has established the
following material and labor standards to produce one tybo:

Standard
Quantity
Standard Price

Direct
materials 2.5 pounds $3 per pound

Direct
labor 0.6 hours $10 per hour

During March 2013, the following activity was
recorded by the company relating to the production of tybos:

1. The company produced 9,000 units during the
month.

2. A total of 24,000 pounds of materials were
purchased at a cost of $66,000.

3. A total of 24,000 pounds of materials were used
in production.

4. 5,000 hours of labor were incurred during the
month at a total wage cost of $55,000.

Instructions

Calculate the following variances for March for Riggins,
Inc.

(a) Materials price variance

(b) Materials quantity variance

(c) Labor price variance

(d) Labor quantity variance

Ex. 205

The following direct labor data pertain to the
operations of Pearce Corp. for the month of November:

Actual
labor rate $12.25
per hr.

Actual
hours used 18,000

Standard
labor rate $12.00
per hr.

Standard
hours allowed 17,100


Ex. 205 (Cont.)

Instructions

Prepare a
matrix and calculate the labor variances.

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Price
Variance Quantity
Variance

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Total

Labor
Variance

Ex. 206

The following direct materials data pertain to
the operations of Wright Co. for the month of December.

Standard materials price $5.00
per pound

Actual quantity of materials purchased and used 16,500 pounds


Ex. 206 (Cont.)

The standard cost card shows that a finished
product contains 4 pounds of materials. The 16,500 pounds were purchased in
December at a discount of 4% from the standard price. In December, 4,000 units
of finished product were manufactured.

Instructions

Prepare a
matrix for materials and calculate the materials variances.

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.gif”> .gif”>

Price
Variance Quantity
Variance

.gif”>

Total

Materials
Variance

Ex. 207

Seacoast Company provided the following information
about its standard costing system for 2013:

Standard
Data
Actual
Data

Materials 10
lbs. @ $4 per lbs. Produced 4,000 units

Labor 3
hrs. @ $21 per hr. Materials
purchased 50,000 lbs. for $215,000

Budgeted production 3,500
units Materials
used 41,000 lbs.

Labor
worked 11,000 hrs.
costing $220,000

Instructions

Calculate the labor price variance and the labor
quantity variance.

Ex. 208

Lumberman Manufacturing provided the following
information about its standard costing system for 2013:

Standard
Data
Actual
Data

Materials 10
lbs. @ $4 per lbs. Produced 4,000 units

Labor 3
hrs. @ $21 per hr. Materials
purchased 50,000 lbs. for $215,000

Budgeted production 3,500
units Materials
used 41,000 lbs.

Labor
worked 11,000 hrs.
costing $220,000

Instructions

Determine the
amount of the materials price variance. By how much will the
materials price variances differ if the price variance is determined at the
time of production?

Ex. 209

Shep Corporation
estimated it would produce 6,200 buckets, though actual production was 6,000
during August. The standard labor cost is 2 buckets per hour at $18.00 per
hour. Actual cost per hour was $18.40 with a total labor cost of $53,360.

Instructions

Determine the amounts of the labor price and the
labor quantity variances for August.

Ex. 210

Purvis Manufacturing, which produces a single
product, has prepared the following standard cost sheet for one unit of the
product.

Direct materials
(6 pounds at $2 per pound) $12

Direct labor (2 hours at $12
per hour) $24

During the month of April, the company
manufactures 300 units and incurs the following actual costs.

Direct materials
purchased and used (1,850 pounds) $4,070

Direct labor (620 hours) $7,130

Instructions

Compute the
total, price, and quantity variances for materials and labor.

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BE 191

Seven
Manufacturing Corporation uses both standards and budgets. The company
estimates that production for the year will be 100,000 units of Product Fast.
To produce these units of Product Fast, the company expects to spend $600,000
for materials and $800,000 for labor.

Instructions

Compute the estimates for (a) a standard cost and
(b) a budgeted cost.

BE 192

Labor data for
making one pound of finished product in Curling Co. are as follows: (1)
Price—hourly wage rate $11.00, payroll taxes $1.80, and fringe benefits $1.20.
(2) Quantity—actual production time 1.1 hours, rest periods and clean up 0.25
hours, and setup and downtime 0.15 hours.

Instructions

Compute the
following.

(a) Standard direct labor
rate per hour.

(b) Standard direct labor
hours per pound.

(c) Standard cost per pound.

BE 193

During March, Patt,
Inc. purchases and uses 8,800 pounds of materials costing $35,640 to make 4,000
tiles. Patt’s standard material cost per tile is $8 (2 pounds of material× $4.00).

Instructions

Compute the total, price, and quantity material
variances for Patt, Inc. for March.

BE 194

During January, Ajax
Co. incurs 1,850 hours of direct labor at an hourly cost of $11.80 in producing
1,000 units of its finished product. Ajax standard labor cost per unit of
output is $22
(2 hours x $11.00).

Instructions

Compute the total, price, and quantity labor
variances for Ajax Co. for January.

BE 195

In October, Glazier Inc. reports 42,000
actual direct labor hours, and it incurs $194,000 of manufacturing overhead
costs. Standard hours allowed for the work done is 40,000 hours. Glazier’s
predetermined overhead rate is $5.00 per direct labor hour.

Instructions

Compute the total manufacturing overhead
variance.

Solution 195 (2 min.)

aBE 196

Overhead data for Glazier Inc. are given in
BE 195. In addition, the flexible manufacturing overhead budget shows that
budgeted costs are $3.80 variable per direct labor hour and $60,000 fixed.

Instructions

Compute the manufacturing overhead
controllable variance.


aBE 197

Using the data in BE 195 and BE 196, compute
the manufacturing overhead volume variance.
Normal capacity was 50,000 direct labor hours.

aBE 198

Jet Industries
purchased 6,000 units of raw material on account for $17,600, when the standard
cost was $18,000. Later in the month, Jet
Industries issued 5,600 units of raw materials for production, when the
standard units were 5,800.

Instructions

Journalize the transactions for Jet Industries to
account for this activity.

A

aBE 199

Pedra, Inc.
incurred direct labor costs of $54,000 for 6,000 hours. The standard labor cost
was $55,200. During the month, Pedra assigned 6,000 direct labor hours costing
$54,000 to production. The standard
hours were 6,200.

Instructions

Journalize the transactions for Pedra, Inc. to
account for this activity.


aBE 200

Manufacturing overhead data for the production
of Product B by North Bank, Inc. are as follows.

Overhead incurred for 69,000
actual direct labor hours worked $206,000

Overhead rate (variable $2.00;
fixed $1.00) at normal capacity of

72,000
direct labor hours $3.00

Standard hours allowed for work
done 69,000

Instructions

Compute the controllable and volume overhead
variances.


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