Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 8, Problem 1P
Materials and labor variances
Branca Inspections Inc. specializes in determining whether a building or house’s drainpipes are properly tied into the city’s sewer system. The company pours colored chemical through the pipes and collects an inspection sample from each outlet, which is then analyzed. Each job should take 15 hours for each of four inspectors, at a standard rate of $18 per hour. Each job requires a standard quantity of 5 gallons of Glow (a colored chemical), which should cost $25 per gallon. Data from the company’s most recent job (a building) follow:
Required:
Compute the following variances, using the formulas on pages 421–422 and 424:
- 1. Materials price and quantity variances.
- 2. Labor rate and efficiency variances.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Frieling Company installs granite countertops in customers' homes. First, the customer chooses the particular granite slab, and then Frieling measures the countertop area at the customer's home, cuts the granite to that shape, and installs it. The Tramel job calls for direct materials of $1,900 and direct labor of $1,000. Overhead is applied at the rate of 120 percent of direct labor cost. Unfortunately, one small countertop breaks during installation and Frieling must cut another piece and install it to properly complete the job. The additional rework required direct materials costing $400 and direct labor costing $100.
Assume that the spoilage was due to the inherently fragile nature of the piece of stone picked out by the Tramels. Frieling had warned them that the chosen piece could require much more care and potentially additional work. As a result, Frieling considers this spoilage to be caused by the Tramels' job.
Required:
1. Calculate the cost of the Tramel job.
2. Does a…
Frieling Company installs granite countertops in customers' homes. First, the customer chooses the particular granite slab, and then Frieling measures the countertop area at the customer's home, cuts the granite to that shape, and installs it. The Tramel job calls for direct materials of $2,200 and direct labor of $700. Overhead is applied at the rate of 110 percent of direct labor cost. Unfortunately, one small countertop breaks during installation and Frieling must cut another piece and install it to properly complete the job. The additional rework required direct materials costing $700 and direct labor costing $400. Assume that the spoilage was due to carelessness by a Frieling worker and it is considered to be normal spoilage.
2. Make any needed journal entry to the overhead control account. If an amount box does not require an entry, leave it blank.
3. What if the additional rework required $800 of direct labor? What would be the effect on the cost of the Tramel job?
Frieling Company installs granite countertops in customers' homes. First, the customer chooses the particular granite slab, and then Frieling measures the countertop area at the customer's home, cuts the granite to that shape, and installs it. The Tramel job calls for direct materials of $2,200 and direct labor of $700. Overhead is applied at the rate of 110 percent of direct labor cost. Unfortunately, one small countertop breaks during installation and Frieling must cut another piece and install it to properly complete the job. The additional rework required direct materials costing $700 and direct labor costing $400. Assume that the spoilage was due to carelessness by a Frieling worker and it is considered to be normal spoilage.
Required:
1. Calculate the cost of the Tramel job.
2. Make any needed journal entry to the overhead control account. If an amount box does not require an entry, leave it blank.
3. What if the additional rework required $800 of direct labor?…
Chapter 8 Solutions
Principles of Cost Accounting
Ch. 8 - How does a standard cost accounting system work,...Ch. 8 - What is the difference between the standard cost...Ch. 8 - Prob. 3QCh. 8 - What are the specific procedures on which a...Ch. 8 - How are standards for materials and labor costs...Ch. 8 - What is a variance?Ch. 8 - How do price and quantity variances relate to...Ch. 8 - How do rate and efficiency variances relate to...Ch. 8 - Prob. 9QCh. 8 - How does a materials purchase price variance...
Ch. 8 - Prob. 11QCh. 8 - Prob. 12QCh. 8 - When a company uses a standard cost system, are...Ch. 8 - What two factors must be considered when breaking...Ch. 8 - What might cause the following materials...Ch. 8 - What might cause the following labor variances?
An...Ch. 8 - Prob. 17QCh. 8 - Prob. 18QCh. 8 - Prob. 19QCh. 8 - Prob. 20QCh. 8 - When does a flexible-budget variance occur?
Ch. 8 - Why is it important to determine flexible-budget...Ch. 8 - Prob. 23QCh. 8 - What is the significance of a production-volume...Ch. 8 - If production is more or less than the standard...Ch. 8 - At the end of the current fiscal year, the trial...Ch. 8 - What variances from the four-variance method are...Ch. 8 - What is the primary difference between the...Ch. 8 - What are the four variances in the four-variance...Ch. 8 - In all of the exercises involving variances, use F...Ch. 8 - Prob. 2ECh. 8 - Prob. 3ECh. 8 - Prob. 4ECh. 8 - Prob. 5ECh. 8 - Computing materials variances D-List Calendar Co....Ch. 8 - Computing labor variances LIFT Inc. manufactures...Ch. 8 - Standard cost summary; materials and labor cost...Ch. 8 - Computing labor variances Fill in the missing...Ch. 8 - Standard unit cost and journal entries The normal...Ch. 8 - Making journal entries Assume that during the...Ch. 8 - Using variance analysis and interpretation Last...Ch. 8 - Using variance analysis and interpretation Last...Ch. 8 - Journalizing standard costs in two departments...Ch. 8 - Calculating factory overhead The standard capacity...Ch. 8 - Determining Budgeted Overhead The overhead...Ch. 8 - Calculating factory overhead: two variances Munoz...Ch. 8 - Calculating factory overhead: two variances...Ch. 8 - The normal capacity of a manufacturing plant is...Ch. 8 - Calculating amount of factory overhead applied to...Ch. 8 - Georgia Gasket Co. budgets 8,000 direct labor...Ch. 8 - (Appendix) Calculating factory overhead: four...Ch. 8 - (Appendix) Calculating factory overhead: three...Ch. 8 - Materials and labor variances Branca Inspections...Ch. 8 - Materials and labor variances Fausto Fabricators...Ch. 8 - Zippy Inc. manufactures a fuel additive, Surge,...Ch. 8 - Calculation of materials and labor variances
Fritz...Ch. 8 - High-End Products Inc. uses a standard cost system...Ch. 8 - RDI Products Co. manufactures a variety of...Ch. 8 - The standard cost summary for the most popular...Ch. 8 - Carlo Lee Corp. has established the following...Ch. 8 - USD Inc. has established the following standard...Ch. 8 - Allocation of variances
Costa Brava Manufacturing...Ch. 8 - On May 1, Athens Inc. began the manufacture of a...Ch. 8 - The standard specifications for an electric motor...Ch. 8 - Cardiff Inc. manufactures men’s sport shirts for...Ch. 8 - Fargo Co. manufactures products in batches of 100...Ch. 8 - Prob. 15PCh. 8 - (Appendix) Overhead variances—four variance
Mobile...Ch. 8 - Shinto Corp. uses a standard cost system and...Ch. 8 - Kamen Manufacturing Co. estimates the following...Ch. 8 - Prob. 19PCh. 8 - Jillian Manufacturing Inc. manufactures a single...Ch. 8 - Cost and production data for Binghamton Beverages...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Johnston Company cleans and applies powder coat paint to metal items on a job-order basis. Johnston has budgeted the following amounts for various overhead categories in the coming year. In the coming year, Johnston expects to powder coat 120,000 units. Each unit takes 1.3 direct labor hours. Johnston has found that supplies and gas (used to run the drying ovensall units pass through the drying ovens after powder coat paint is applied) tend to vary with the number of units produced. All other overhead categories are considered to be fixed. (Round all overhead rates to the nearest cent.) Required: 1. Calculate the number of direct labor hours Johnston must budget for the coming year. Calculate the variable overhead rate. Calculate the total fixed overhead for the coming year. 2. Prepare an overhead budget for Johnston for the coming year. Show the total variable overhead, total fixed overhead, and total overhead. Calculate the fixed overhead rate and the total overhead rate (rounded to the nearest cent). 3. What if Johnston had expected to make 118,000 units next year? Assume that the variable overhead per unit does not change and the total fixed overhead amounts do not change. Calculate the new budgeted direct labor hours and prepare a new overhead budget. Calculate the fixed overhead rate and the total overhead rate (rounded to the nearest cent).arrow_forwardEyring Manufacturing produces a component used in its production of washing machines. The time to set up and produce a batch of the components is two days. The average daily usage is 800 components, and the maximum daily usage is 875 components. Required: Compute the reorder point assuming that safety stock is carried by Eyring Manufacturing. How much safety stock is carried by Eyring?arrow_forwardJameson Company produces paper towels. The company has established the following direct materials and direct labor standards for one case of paper towels: During the first quarter of the year, Jameson produced 45,000 cases of paper towels. The company purchased and used 135,700 pounds of paper pulp at 0.38 per pound. Actual direct labor used was 91,000 hours at 12.10 per hour. Required: 1. Calculate the direct materials price and usage variances. 2. Calculate the direct labor rate and efficiency variances. 3. Prepare the journal entries for the direct materials and direct labor variances. 4. Describe how flexible budgeting variances relate to the direct materials and direct labor variances computed in Requirements 1 and 2.arrow_forward
- The Peric Manufacturing Shop produces motorcycle parts. Typically, 12 pieces out of a job lot of 1,000 parts are spoiled. Costs are assigned at the inspection point, $40.00 per unit. Spoiled pieces may be disposed at $8.00 per unit. The spoiled goods must be inventoried appropriately when the normal spoilage is detected. The current job requires the production of 3,000 good parts. Which of the following journal entries would be correct if the spoilage occurred due to specifications required for Job 101? a. Dr. Work-in-Process Control 96; Cr. Materials Control 96 b. Dr. Materials Control 288; Cr. Work-in-Process Control 288 c. Dr. Work-in-Process Control 288; Cr. Materials Control 288 d. Dr. Materials Control 96; Cr. Work-in-Process Control 96arrow_forwardLily Painting Service specializes in painting tall office buildings. During a recent month, the company worked on three painting projects (the Arrow Building, the Besler Building and the Cartrwright Building). The company is interested in controlling the materials costs, namely the paint, used for these painting contracts. In order to provide management with useful cost control information, the company uses standard costs and prepares monthly variance reports. Analysis reveals that the purchasing agent mistakenly purchased poor-quality paint for the Arrow Building project. The Besler Building project, however, received higher-than-standard-quality paint that was on sale. The Cartwright Building project received standard-quality paint. However, the price had increased and a new employee was used to paint the building. Shown below are quantity and cost data for each project. Project Arrow Building Costs 3,720 gallons $275,280 3,500 gallons $273,000 bring $290,320 4,000 $363,200 4,220…arrow_forwardLily Painting Service specializes in painting tall office buildings. During a recent month, the company worked on three painting projects (the Arrow Building, the Besler Building and the Cartrwright Building). The company is interested in controlling the materials costs, namely the paint, used for these painting contracts. In order to provide management with useful cost control information, the company uses standard costs and prepares monthly variance reports. Analysis reveals that the purchasing agent mistakenly purchased poor-quality paint for the Arrow Building project. The Besler Building project, however, received higher-than-standard-quality paint that was on sale. The Cartwright Building project received standard-quality paint. However, the price had increased and a new employee was used to paint the building. Shown below are quantity and cost data for each project. Project Arrow Building Besler Building Total variance (a) Cartwright Building 4,540 Project Arrow Building Besler…arrow_forward
- Anders Painting Service specializes in painting tall office buildings. During a recent month, the company worked on three painting projects (the Arrow Building, the Besler Building and the Cartrwright Building). The company is interested in controlling the materials costs, namely the paint, used for these painting contracts. In order to provide management with useful cost control information, the company uses standard costs and prepares monthly variance reports. Analysis reveals that the purchasing agent mistakenly purchased poor-quality paint for the Arrow Building project. The Besler Building project, however, received higher-than-standard-quality paint that was on sale. The Cartwright Building project received standard-quality paint. However, the price had increased and a new employee was used to paint the building. Shown below are quantity and cost data for each project. Actual Project Arrow Building Besler Building Cartwright Building 4,500 Total variance Quantity 3,750 gallons…arrow_forwardFrieling Company installs granite countertops in customers' homes.First, the customer chooses the particular granite slab, and then Frielingmeasures the countertop area at the customer's home, cuts the granite tothat shape, and installs it. The Tramel job calls for direct materials of$1,900 and direct labor of $500. Overhead is applied at the rate of 140 percent of direct labor cost. Unfortunately, one small countertop breaksduring installation and Frieling must cut another piece and install it toproperly complete the job. The additional rework required directmaterials costing $400 and direct labor costing $100. Assume that thespoilage was due to carelessness by a Frieling worker and it isconsidered to be normal spoilage. Refer to the data in Cornerstone Exercise 5.4. Now assume that thespoilage was due to the inherently fragile nature of the piece of stonepicked out by the Tramels. Frieling had warned them that the chosenpiece could require much more care and potentially additional…arrow_forwardCarson Construction Consultants performs cement core tests in its Greenville laboratory. The following standard costs for the tests have been developed by the company’s controller, Landon Carson, based on performing 2,100 core tests per month. Standard Price Standard Quantity Standard Cost Direct materials $0.5 per pound 4 pounds $2.00 Direct labor $10 per DLH 0.5 DLH 5.00 Variable overhead $9 per DLH 0.5 DLH 4.50 Fixed overhead $16 per DLH 0.5 DLH 8.00 Total standard cost per test $19.50 At the end of March, London reported the following operational results: ● The company actually performed 2,250 core tests during the month. ● 8,500 pounds of direct materials were purchased during the month at a total cost of $5,600. ● 6,300 pounds of direct materials were used to conduct the core tests. ● 850 direct labor hours were worked at a total cost of $9,775. ●…arrow_forward
- Carson Construction Consultants performs cement core tests in its Greenville laboratory. The following standard costs for the tests have been developed by the company’s controller, Landon Carson, based on performing 2,100 core tests per month. Standard Price Standard Quantity Standard Cost Direct materials $0.5 per pound 4 pounds $2.00 Direct labor $10 per DLH 0.5 DLH 5.00 Variable overhead $9 per DLH 0.5 DLH 4.50 Fixed overhead $16 per DLH 0.5 DLH 8.00 Total standard cost per test $19.50 At the end of March, London reported the following operational results: ● The company actually performed 2,250 core tests during the month. ● 8,500 pounds of direct materials were purchased during the month at a total cost of $5,600. ● 6,300 pounds of direct materials were used to conduct the core tests. ● 850 direct labor hours were worked at a total cost of $9,775. ●…arrow_forwardSunland Industries produces a cleaning product that works for the peskiest stains. It's pricey, but less expensive than hiring a professional cleaning service. The managers at Sunland are conducting variance analysis at the end of January, the first month of the new fiscal year. Budgeted fixed-MOH costs for the year were $2,534,400. The company's standards for one gallon of cleaning solution are as follows, along with actual information for the month. DM DL Variable-MOH Fixed-MOH ● ● ● Standard Quantity per Unit 0.5 gallons of solution 0.3 DL hours Actual results for January: ● 2.0 machine hours 2.0 machine hours. Show Transcribed Text Show Transcribed Text 26,000 gallons were actually produced. Cost of DM purchased was $250,560 for 14,400 gallons of solution. DM used in production was 12,740 gallons. Cost of DL was $133,796 for 8,060 DL hours worked. Variable-MOH cost was $117,390 for 54,600 machine hours used. Fixed-MOH cost was $223,860. Fixed-MOH price variance $ $17.00 per gallon…arrow_forwardA small manufacturer of small metal components is planning its production for next month. The company has two products, Product A and Product B. Profit for Product A is $64per case, and profit for Product B is $87 per case. The three main departments at the manufacturing plant are cutting, trimming, and coating. In the production process, metal bars are first cut to the proper length, then trimmed to the desired angle, then coated with corrosive protection. Each production department works two8-hour shifts, 5days per week. The production rates for parts in each production department are shown below Production Rates(cases/shift) Cutting Trimming Coating Product A 3.2 2.0 0 Product B 2.5 4.0 1.0 How many cases of each product should be produced per week to maximize profits?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY