TB MC Qu. 10-91 Lamar Corporation's... Lamar Corporation's purchasing manager obtained a special price on an aluminum alloy from a new supplier, resulting in a direct-material price variance of $10,700F. The alloy produced more waste than normal, as evidenced by a direct- material quantity variance of $3,500U, and was also difficult to use. This slowed worker efficiency, generating a $4,000U labor efficiency variance. To help remedy the situation, the production manager used senior line employees, which gave rise to a $1,30OU labor rate variance. If overall product quality did not suffer, what variance amount is best used in judging the appropriateness of the purchasing manager's decision to acquire substandard material?

TB MC Qu. 10-91 Lamar Corporation's... Lamar Corporation's purchasing manager obtained a special price on an aluminum alloy from a new supplier, resulting in a direct-material price variance of $10,700F. The alloy produced more waste than normal, as evidenced by a direct- material quantity variance of $3,500U, and was also difficult to use. This slowed worker efficiency, generating a $4,000U labor efficiency variance. To help remedy the situation, the production manager used senior line employees, which gave rise to a $1,30OU labor rate variance. If overall product quality did not suffer, what variance amount is best used in judging the appropriateness of the purchasing manager's decision to acquire substandard material?

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Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter9: Standard Costing: A Functional-based Control Approach

Section: Chapter Questions

Problem 21E: Madison Company uses the following rule to determine whether direct labor efficiency variances ought...

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TB MC Qu. 8-60 (Static) Heartwood Company reported a $4,000... Heartwood Company reported a $4,000 favorable direct labor price variance and a $1,500 unfavorable direct labor usage variance. Select the correct statement from the following. Multiple Choice It took the employees less time to produce the outputs than expected, The total direct labor variance is $2,500 favorable The actual direct labor rate must have exceeded the standard direct labor rate. It is probable that the supervisor attempted to use more highly skilled (and paid) employees than allowed for by the direct labor standards.
In good accounting form, compute for the:1. Price variance2. Efficiency variance3. Materials variance Maricol company uses a standard costing system in connection with the manufacture of their product "x". each unit of the finished product contains 2 yards of a direct material. However, a 20% direct material spoilage calculated on input quantities occurs during the manufacturing process. The standard cost of the direct material is p3 per yard. for the month, the company purchased 100,000 yards of the direct material for p350,000 and used 90,000 yards to produce 40,000 units of material x.
Sitka Industries uses a cost system that carries direct materials inventory at a standard cost. The controller has established these standards for one ladder (unit): Sitka Industries made 3,000 ladders in July and used 8,800 pounds of material to make these units. Smith Industries bought 15,500 pounds of material in the current period. There was a $250 unfavorable direct materials price variance. A. How much in total did Sitka pay for the 15,500 pounds? B. What is the direct materials quantity variance? C. What is the total direct material cost variance? D. What ii 9,500 pounds were used to make these ladders, what would be the direct materials quantity variance? E. It there was a $340 favorable direct materials price variance, how much did Sitka pay for the 15,500 pounds of material?
During its first year of operations, Snobegon, Inc. (located in Lake Snobegon, Minnesota), produced 40,000 plastic snow scoops. Snow scoops are oversized shovel-type scoops that are used to push snow away. Unit sales were 38,200 scoops. Fixed overhead was applied at 0.75 per unit produced. Fixed overhead was underapplied by 2,900. This fixed overhead variance was closed to Cost of Goods Sold. There was no variable overhead variance. The results of the years operations are as follows (on an absorption-costing basis): Required: 1. Calculate the cost of the firms ending inventory under absorption costing. What is the cost of the ending inventory under variable costing? (Round unit costs to five significant digits.) 2. Prepare a variable-costing income statement. Reconcile the difference between the two income figures.
Madison Company uses the following rule to determine whether direct labor efficiency variances ought to be investigated. A direct labor efficiency variance will be investigated anytime the amount exceeds the lesser of 12,000 or 10 percent of the standard labor cost. Reports for the past five weeks provided the following information: Required: 1. Using the rule provided, identify the cases that will be investigated. 2. Suppose that investigation reveals that the cause of an unfavorable direct labor efficiency variance is the use of lower quality direct materials than are usually used. Who is responsible? What corrective action would likely be taken? 3. Suppose that investigation reveals that the cause of a significant favorable direct labor efficiency variance is attributable to a new approach to manufacturing that takes less labor time but causes more direct materials waste. Upon examining the direct materials usage variance, it is discovered to be unfavorable, and it is larger than the favorable direct labor efficiency variance. Who is responsible? What action should be taken? How would your answer change if the unfavorable variance were smaller than the favorable?
Ed Co. manufactures two types of O rings, large and small. Both rings use the same material but require different amounts. Standard materials for both are shown. At the beginning of the month, Edve Co. bought 25,000 feet of rubber for $6.875. The company made 3,000 large O rings and 4,000 small O rings. The company used 14,500 feet of rubber. A. What are the direct materials price variance, the direct materials quantity variance, and the total direct materials cost variance? B. If they bought 10,000 connectors costing $310, what would the direct materials price variance be for the connectors? C. If there was an unfavorable direct materials price variance of $125, how much did they pay per toot for the rubber?
Stahman, Inc., estimates its hidden external failure costs using the Taguchi loss function. Stahlman produces plastic sheets that vary in thickness and grade. For one of its large-volume products, it was determined that k = 30,000 and T = 0.28 inches in diameter. A sample of four units produced the following values: Required: 1. Calculate the average loss per unit. 2. Assuming that 100,000 units were produced, what is the total hidden cost? 3. Assume that the multiplier for Stahmans hidden external failure costs is six. What are the measured external costs? Explain the difference between measured costs and hidden costs.
Variance interpretation Vanadium Audio Inc. is a small manufacturer of electronic musical instruments. The plant manager received the following variable factory overhead report for the past month of operations: Actual units produced: 15,000 (90% of practical capacity) The plant manager is not pleased with the 12,320 unfavorable variable factory overhead controllable variance and has come to discuss the matter with the controller. The following discussion occurred: Plant Manager: I just received this factory report for the latest month of operations. Im not very pleased with these figures. Before these numbers go to headquarters, you and I need to reach an understanding. Controller: Go ahead. Whats the problem? Plant Manager: Whats the problem? Well, everything. Look at the variance. Its too large. If I understand the accounting approach being used here, you are assuming that my costs are variable to the units produced. Thus, as the production volume declines, so should these costs. Well, I dont believe these costs are variable at all. I think they are fixed costs. As a result, when we operate below capacity, the costs really dont go down. Im being penalized for costs I have no control over. I need this report to be redone to reflect this fact. If anything, the difference between actual and budget is essentially a volume variance. Listen, I know that youre a team player. You really need to reconsider your assumptions on this one. Assume you are the controller. Write a memo responding to the plant manager.
Please do not give solution in image formate thanku. The following five unrelated situations affect one or more standard cost variances for materials, labor (assembly), and overhead: 1. At the beginning of the month, a supplier of a component used in our product notified us that, because of a minor design improvement, the price will be increased by 15 percent above the current standard price of $100 per unit. As a result of the improved design, we expect the number of defective components to decrease by 80 units per month. On average, 1,200 units of the component are purchased each month. Defective units are identified prior to use and are not returnable. 2. In an effort to meet a deadline on a rush order in Department A, the plant manager reassigned several higher-skilled workers from Department B, for a total of 300 labor hours. The average salary of the Department B workers was $2.05 more than the standard $7.25 per hour rate of the Department A workers. Since they were not…
Hughes Satellites' actual direct labor cost was $67,000 during the current period. Hughes reported an unfavorable direct labor rate variance of $1,800 and a favorable direct labor efficiency variance of $2,900. What was the standard direct labor cost for actual output during the period? IMPORTANT: Provide your answer in the following format: xxxxx (Do NOT use the dollar sign or commas in your final answer) Answer:
A company uses 8200 pounds of materials and exceeds the standard quantity by 400 pounds. The quantity variance is $1500 unfavorable. What is the standard materials price? O $3.75- O Cannot be determined from the data provided. O $1.25 O $2.50
The following computations are incomplete. The missing items are labeled (a) through (d). identify each missing item by name (a through c) and show the missing value (a through d). Labor rate variance = 4,800 hours x [(a) – $8.50] = $350 favorable Labor efficiency variance = (b) x [(c) – 5,000 hours] = $(d) Also, if the manager of the company left without arranging for a replacement, which variances would have been most affected?