108) The data below relate to a product of Omaha Company.
Standard costs:
Materials, 3 pounds at $7 per pound $ 21 per unit
Labor, 4 hours at $18 per hour $ 72 per unit
Budgeted production for the year 2,000 units
Actual results were:
Production 1,800 units
Material purchases, 6,000 pounds $ 48,230
Labor, 7,420 hours $ 140,170
Material used in production 5,750 pounds
Required:
(Be sure to indicate whether the variance is favorable or unfavorable.)
a. Compute the direct material price variance.
b. Compute the direct material efficiency variance.
c. Compute the direct labor rate variance.
d. Compute the direct labor efficiency variance.
109) Compound Y23Z is used by Carrington Corporation to make one of its products. The
standard cost of compound Y23Z is $38.70 per ounce and the standard quantity is 4.6 per unit of
output. Data concerning the compound in the most recent month appear below:
Cost of material purchased in November, per ounce $ 39.20
Material purchased in November, ounces 2,800
Material used in production in November, ounces 2,360
Actual output in November, units 500
The raw material was purchased on account.
Required:
a. Record the purchase of the raw material at standard cost in a journal entry.
b. Record the use of the raw material in production in a journal entry.
110) The following standards have been established for a raw material used to make product
P62:
Standard quantity of the material per unit of output 6.3 pounds
Standard price of the material $ 15.50 per pound
The following data pertain to a recent month’s operations:
Actual material purchased 6,700 pounds
Actual cost of material purchased $ 100,500
Actual material used in production 6,400 pounds
Actual output 920 units of product P62
Required:
a. What is the material price variance for the month?
b. What is the material efficiency variance for the month?
111) High Tech builds fence panels to custom order. Materials include 15 units of lumber at
$2.25 per unit. Standards call for 3 hours of labor at $25 per hour.
During October, 3,121 fence panels were built. Materials purchased totaled $113,650 for 51,100
units of lumber. Actual lumber usage in production was 51,069 units. The October payroll was
$248,000 for 9,500 hours.
Required:
(Be sure to indicate whether the variance is favorable or unfavorable.)
a. Compute the direct material price variance.
b. Compute the direct material efficiency variance.
c. Compute the direct labor rate variance.
d. Compute the direct labor efficiency variance.
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112) The Oregon Company produces and sells a single product. Standards have been established
for the product as follows:
Direct materials: 5 pounds @ $3.50 per pound = $17.50
Direct labor: 3 hours @ $5.50 per hour = $16.50
Actual cost and usage figures for the past month follow:
Units produced 750
Direct materials used 4,000 pounds
Direct materials purchased (4,500 pounds) $ 14,400
Direct labor cost (2,000 hours) $ 11,200
Required:
Prepare journal entries to record:
a. The purchase of raw materials.
b. The usage of raw materials in production.
c. The incurrence of direct labor cost.
113) The data below relate to a product of Bullfrog Company.
Standard costs:
Materials, 2 pounds at $6 per pound $ 12 per unit
Labor, 3 hours at $15 per hour $ 45 per unit
Budgeted production for the year 4,000 units
Actual results were:
Production 3,600 units
Material purchases, 8,000 pounds $ 46,400
Labor, 10,360 hours $ 160,580
Material used in production 7,300 pounds
Required:
(Be sure to indicate whether the variance is favorable or unfavorable.)
a. Compute the direct material price variance.
b. Compute the direct material efficiency variance.
c. Compute the direct labor rate variance.
d. Compute the direct labor efficiency variance.
114) Next year’s budget for Howard, Inc., a multi-product company, is given below:
At the end of the year, the total fixed costs and the variable costs per unit were exactly as
budgeted, but the following units per product line were sold. Howard analyzes the effects its
sales variances have on the profitability of the company.
Product Line Units Sales Mkt share
A 252,230 $ 1,848,579 15.0 %
B 113,770 $ 1,479,010 17.0 %
Required:
(Be sure to indicate whether the variance is favorable or unfavorable.)
a. Compute the sales activity variance for each product.
b. Compute the market share variance for each product.
c. Compute the industry volume variance for each product.
115) The Buffett Company had the following expectations:
Total market for the product 175,000 units
Buffett’s budgeted sales 54,250
Contribution margin per unit $ 13.00
Actual results for the year were:
Total market for the product 166,250 units
Buffett’s actual sales 56,525
Required:
(Be sure to indicate whether the variance is favorable or unfavorable.)
a. Compute Buffett’s sales activity variance.
b. Compute Buffett’s market share variance.
c. Computer Buffett’s industry volume variance.
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116) Next year’s budget for Alton, Inc., is given below:
At the end of the year, the total fixed costs and the variable costs per unit were exactly as
budgeted, but the following units per product line were sold:
Product Line Units Sales Mkt share
1 126,200 $ 958,579 16.0 %
2 56,800 $ 721,010 14.2 %
Required:
(Be sure to indicate whether the variance is favorable or unfavorable.)
a. Compute the sales activity variance for each product.
b. Compute the market share variance for each product.
c. Compute the industry volume variance for each product.
117) The Stangle Company had the following expectations:
Total market for the product 350,000 units
Stangle’s budgeted sales 108,500
Contribution margin per unit $ 12.00
Actual results for the year were:
Total market for the product 332,500 units
Stangle’s actual sales 113,050
Required:
(Be sure to indicate whether the variance is favorable or unfavorable.)
a. Compute Stangle’s sales activity variance.
b. Compute Stangle’s market share variance.
c. Computer Stangle’s industry volume variance.
118) Porcini Enterprises produces two products, AR and QT. Actual and budgeted information
for the year ending April 30 is provided below:
Required:
(Be sure to indicate whether the variance is favorable or unfavorable.)
a. Compute the sales activity variance for each product.
b. Compute the sales mix variance for each product.
c. Compute the sales quantity variance for each product.
119) Next year’s budget for Canfield, Inc., a multi-product company, is given below:
At the end of the year, the total fixed costs and the variable costs per unit were exactly as
budgeted, but the following units per product line were sold. Canfield analyzes the effects its
sales variances have on the profitability of the company.
Product Line Units Sales
A 252,230 $ 1,848,579
B 113,770 $ 1,479,010
Required:
(Be sure to indicate whether the variance is favorable or unfavorable.)
a. Compute the sales activity variance for each product.
b. Compute the sales mix variance for each product.
c. Compute the sales quantity variance for each product.
120) Virginia Enterprises produces two products, Standard and Deluxe. Actual and budgeted
information for the year is provided below:
Required:
(Be sure to indicate whether the variance is favorable or unfavorable.)
a. Compute the sales activity variance for each product.
b. Compute the sales mix variance for each product.
c. Compute the sales quantity variance for each product.
95
121) Next year’s budget for Temper, Inc., is given below:
At the end of the year, the total fixed costs and the variable costs per unit were exactly as
budgeted, but the following units per product line were sold:
Product Line Units Sales
1 126,200 $ 958,579
2 56,800 $ 721,010
Required:
(Be sure to indicate whether the variance is favorable or unfavorable.)
a. Compute the sales activity variance for each product.
b. Compute the sales mix variance for each product.
c. Compute the sales quantity variance for each product.
122) A chemical company in the Midwest produces a solvent used by manufacturers of plastics.
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Three basic chemicals go into this solvent. The standards for one-liter of this product are:
Chemical A: 500 ml. @ $10 per liter
Chemical B: 100 ml. @ $50 per liter
Chemical C: 400 ml. @ $20 per liter
During the last period, 10,000 liters of the solvent were produced and the company purchased the
following amounts of each chemical:
Chemical A: 6,400 liters @ $9.00 per liter
Chemical B: 900 liters @ $75.00 per liter
Chemical C: 4,200 liters @ $20.00 per liter
Because these chemicals are volatile, the company uses them immediately upon purchase, so
there are no beginning and ending inventories.
Required:
(Be sure to indicate whether the variance is favorable or unfavorable.)
a. Compute the direct material price variances for the three basic chemicals.
b. Compute the direct material efficiency variances for the three basic chemicals.
c. Compute the direct material mix variances for the three basic chemicals.
d. Compute the direct material yield variances for the three basic chemicals.
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123) A chemical company produces a product used by manufacturers of plastics. Two basic
chemicals go into this product. The standards for one-liter of this product are:
Chemical 1: 800 ml. @ $50 per liter
Chemical 2: 200 ml. @ $200 per liter
During the last period, 5,000 liters of the solvent were produced and the company purchased the
following amounts of each chemical:
Chemical 1: 5,400 liters @ $59.00 per liter
Chemical 2: 900 liters @ $225.00 per liter
Because these chemicals are volatile, the company uses them immediately upon purchase, so
there are no beginning and ending inventories.
Required:
(Be sure to indicate whether the variance is favorable or unfavorable.)
a. Compute the direct material price variances for the two basic chemicals.
b. Compute the direct material efficiency variances for the two basic chemicals.
c. Compute the direct material mix variances for the two basic chemicals.
d. Compute the direct material yield variances for the two basic chemicals.