Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Chapter 8, Problem 5P
Analysis of materials and labor variances
High-End Products Inc. uses a
Direct materials: 10 feet of Class at $.75 per foot and 3 feet of Chic at $1.00 per foot.
Direct labor: 4 hours at $12.00 per hour.
Factory
There was no beginning inventory on hand at July 1. Following is a summary of costs and related data for the production of Swank during the following year ended June 30:
100,000 feet of Class were purchased at $.72 per foot.
30,000 feet of Chic were purchased at $1.05 per foot.
8,000 units of Swank were produced that required 78,000 feet of Class, 26,000 feet of Chic, and 31,000 hours of direct labor at $11.80 per hour.
6,000 units of product Swank were sold.
On June 30, there are 22,000 feet of Class, 4,000 feet of Chic, and 2,000 completed units of Swank on hand. All purchases and transfers are “charged in” at standard.
Required:
Calculate the following, using the formulas on pages 421–422 and 424 and compute the materials variances for both Class and Chic:
- 1. Materials quantity variance.
- 2. Materials purchase price variance.
- 3. Labor efficiency variance.
- 4. Labor rate variance.
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Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis
Santiago Inc. processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 78,000 units of product were as follows:
Line Item Description
Standard Costs
Actual Costs
Direct materials
195,000 lbs. at $5.50 per lb.
193,100 lbs. at $5.40 per lb.
Direct labor
19,500 hrs. at $16.80 per hr.
19,950 hrs. at $17.10 per hr.
Factory overhead
Rates per direct labor hr., based on 100% of normal capacity of 20,350 direct labor hrs.:
Factory overhead
Variable cost, $2.90
$55,980 variable cost
Factory overhead
Fixed cost, $4.60
$93,610 fixed cost
Each unit requires 0.25 hour of direct labor.
Required:
a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost…
Unit Costs, Multiple Products, Variance Analysis, Journal Entries
Business Specialty, Inc., manufactures two staplers: small and regular. The standard quantities of direct labor and direct materials per unit for the year are as follows:
Small
Regular
Direct materials (oz.)
6.0
10.00
Direct labor (hrs.)
0.1
0.15
The standard price paid per pound of direct materials is $1.60. The standard rate for labor is $8.00. Overhead is applied on the basis of direct labor hours. A plantwide rate is used. Budgeted overhead for the year is as follows:
Budgeted fixed overhead
$360,000
Budgeted variable overhead
480,000
The company expects to work 12,000 direct labor hours during the year; standard overhead rates are computed using this activity level. For every small stapler produced, the company produces two regular staplers.
Actual operating data for the year are as follows:
Units produced: small staplers, 35,000; regular staplers, 70,000.
Direct materials purchased and…
Unit Costs, Multiple Products, Variance Analysis, Journal Entries
Business Specialty, Inc., manufactures two staplers: small and regular. The standard quantities of direct labor and direct materials per unit for the year are as follows:
Small
Regular
Direct materials (oz.)
6.0
10.00
Direct labor (hrs.)
0.1
0.15
The standard price paid per pound of direct materials is $1.60. The standard rate for labor is $8.00. Overhead is applied on the basis of direct labor hours. A plantwide rate is used. Budgeted overhead for the year is as follows:
Budgeted fixed overhead
$360,000
Budgeted variable overhead
480,000
The company expects to work 12,000 direct labor hours during the year; standard overhead rates are computed using this activity level. For every small stapler produced, the company produces two regular staplers.
Actual operating data for the year are as follows:
Units produced: small staplers, 35,000; regular staplers, 70,000.
Direct materials purchased and…
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...
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