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188) Maxwell Co. collected the following information about its production activities for the current year.
a. Compute the direct materials price and quantity variances and indicate whether each is favorable
or unfavorable.
b. Prepare the journal entry to record the issuance of direct materials into production.
Actual costs and quantities:
Direct materials used 95,000 lbs. @ $6.30 per lb.
Units completed during the year, 50,000 units
Standard costs and quantities:
Price per lb. of direct material, $6.05
Two lbs. of direct material per unit
189) Linx Company's output for a period was assigned the standard direct labor cost of $17,160. If the
company had a favorable direct labor rate variance of $1,000 and an unfavorable direct labor
efficiency variance of $275, what was the total actual cost of direct labor incurred during the
period?
190) Tiger, Inc. budgeted the following overhead costs for the current year assuming operations at 80% of
capacity, or 40,000 units:
Total variable overhead …………….
$240,000
Total fixed overhead ……………….
560,000
Total overhead …………………….
$800,000
The standard cost per unit when operating at this same 80% capacity level is:
Direct materials (5 lbs. @ $4/1b.) …………
$20.00
Direct labor (2 hrs. @ $8.75 hr.) ………….
17.50
Variable overhead (2 hrs. @ $3/hr.) …………
6.00
Fixed overhead (2 hrs. @ $7/hr.) ………….
14.00
Total cost per unit ………………………….
$57.50
The actual production achieved in the current year was 60% of capacity, or 30,000 units. The actual
costs were:
Direct materials (150,350 lbs.) ………….
$616,435
Direct labor (59,800 hrs.) ……………….
520,260
Variable overhead ………….……………
192,000
Fixed overhead ………….………….…...
552,000
Calculate the following variances and indicate whether each is favorable or unfavorable.
Direct materials:
Price variance
Quantity variance
Direct labor:
Rate variance
Efficiency variance
142
Efficiency variance
Variable overhead:
Spending variance
Efficiency variance
Fixed overhead:
Spending variance
Volume variance
191) Beluga Corp. has developed standard costs based on a predicted operating level of 352,000 units of
production, which is 80% of capacity. Variable overhead is $281,600 at this level of activity, or $0.80
per unit. Fixed overhead is $440,000. The standard costs per unit are:
Direct materials (0.5 lbs. @ $1/1b.) …… $0.50 per unit
Direct labor (1 hour @ $6/hour) ………. $6.00 per unit
Overhead (1 hour @ $2.05/hour) ……… $2.05 per unit
Beluga actually produced 330,000 units at 75% of capacity and actual costs for the period were:
Direct materials (162,000 lbs.) ……….
$ 170,100
Direct labor (329,500 hours) ………….
$2,042,900
Fixed overhead …………………………
$ 438,000
Variable overhead …………………….
$ 262,000
Calculate the following variances and indicate whether each variance is favorable or unfavorable:
(1) Direct labor efficiency variance: $_
(2) Direct materials price variance: $________
(3) Controllable overhead variance: $________
192) The following information comes from the records of Barney Co. for the current period.
a. Compute the direct materials price and quantity variances, direct labor rate and efficiency
variances and state whether the variance is favorable or unfavorable.
b. Prepare the journal entries to charge direct materials and direct labor costs to work in process and
the materials and labor variances to their proper accounts.
Actual costs and quantities:
Direct materials used …………………
37,000 feet @ $6.20 per foot
Direct labor hours used ………………
50,660 hours
Direct labor rate per hour …………….
$16.50
25,000 units were produced during the period.
Standard costs and quantities per unit:
Direct materials ……………………… 1.5 ft. @ $6.10 per ft.
Direct labor …………………………... 2 hours @ $17 per hour
147
193) The following information comes from the flexible budget performance report of Jackal Corp. for the
current period. Prepare the journal entries to charge direct materials and direct labor costs to work in
process and the materials and labor variances to their proper accounts.
Direct materials actual cost………………………… $237,400
Direct materials standard cost …………………… $238,750
Materials price variance…………………………. $11,700 U
Materials quantity variance………………………… $13,050 F
194) The following information comes from the records of Magno Co. for the current period.
a. Compute the overhead controllable and volume variances. In each case, state whether the variance
is favorable or unfavorable.
b. Prepare the journal entries to charge overhead costs to work in process and the overhead variances
to their proper accounts.
Actual costs and quantities:
Direct materials used ………………………... 38,000 feet @ $6.20 per foot
Direct labor hours used ……………………… 50,660 hours
Direct labor rate per hour ……………………. $16
Factory overhead ……………………………. $211,600
25,000 units were produced during the period.
Standard costs and quantities per unit:
Direct materials ………………………………. 1.5 ft. @ $6.10 per ft.
Direct labor …………………………………… 2 hours @ $17 per hour
Factory overhead (based on budgeted production of 24,500 units)
Variable overhead $2.25/direct labor hour
Fixed overhead $1.95/direct labor hour
195) If Mercury Company's actual overhead incurred during a period was $32,700 and the company
reported a favorable overhead controllable variance of $1,200 and an unfavorable overhead volume
variance of $900, how much standard overhead cost was assigned to the products produced during
the period?
196) A company's flexible budget for 36,000 units of production showed variable overhead costs of
$54,000 and fixed overhead costs of $50,000. The company actually incurred total overhead costs
of $95,300 while operating at a volume of 32,000 units. What is the controllable variance?
197) During November, Gliem Company allocated overhead to products at the rate of $26.00 per direct
labor hour. This figure was based on 80% of capacity or 1,600 direct labor hours. However, Gliem
Company operated at only 70% of capacity, or 1,400 direct labor hours. Budgeted overhead at 70%
of capacity is $38,900, and overhead actually incurred was $38,000. What is the company's volume
variance for November? (Indicate whether the variance is favorable or unfavorable)
198) Selected information from Richards Company's flexible budget is presented below:
Operating Levels
80%
90%
100%
Budgeted production in units
4,800
5,400
6,000
Budgeted labor (standard hours)
9,600
10,800
12,000
Budgeted overhead:
Variable overhead
$86,400
$97,200
$108,000
Fixed overhead
63,600
63,600
63,600
Richards Company applies overhead to production at a rate of $31.25 per unit based on a normal
operating level of 80% of capacity. For the current period, Richards Company produced 5,400 units
and incurred $62,000 of fixed overhead costs and $96,000 of variable overhead costs. The
company used 11,000 labor hours to produce the 5,400 units. Calculate the variable overhead
spending and efficiency variances, and the fixed overhead spending and volume variances. Indicate
whether each variance is favorable or unfavorable.
199) Hatter, Inc. allocates fixed overhead at a rate of $17 per direct labor hour. This amount is based on
90% of capacity or 3,600 direct labor hours for 6,000 units. During July, Hatter produced 5,500
units. Budgeted fixed overhead is $66,000, and overhead incurred was $67,000.
Required: Determine the volume variance for July.
200) Gleason Company has developed the following standard cost data based on 60,000 direct labor
hours, which is 75% of capacity. Fixed overhead is $360,000 and variable overhead is $180,000 at
this level of activity.
Per Unit
Direct material (3 lbs. @ $2.00/1b.) ………… $ 6.00
Direct labor (0.5 hrs. @ $8.00/hr. ) …………. 4.00
Var i ab le o v er h ead ( 0. 5 h rs . @ $ 3 .0 0 / hr.) …… 1. 5 0
Fixe d ove rhead (0.5 hrs. @ $6.00/hr.) ……… 3.00
Total standard cost ………...………...………
151 $14.50
