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103.
Standard cost system-materials and labor variances
The Hemlock Corporation produces a single product. The company has developed the
following standards for labor and materials:
During the past month, the company purchased 3,500 pounds of direct materials at a total
cost of $4,550. All of this material was used in the production of 1,300 units of output.
Direct labor cost totaled $40,300 for the month. The following variances have been
computed:
Compute the following. If the result is a variance indicate whether it is favorable or
unfavorable. If necessary, round your answers.
(a) The standard price of materials ________________.
(b) The standard quantity of materials allowed per unit of output _________.
(c) The actual direct labor cost per hour for the month _____________.
(d) The labor rate variance _____________________.
104.
The Delux Company purchased and used 2,900 yards of material in its manufacturing
process. The actual cost of the materials was $2.20 per yard. Standard materials and costs
were 2,700 yards at $2.00 per yard.
Required:
(a) Compute the materials quantity variance.
(b) Compute the materials price variance.
(c) Compute the total material variance.
105.
Caesar, Inc. purchased and used 47,600 pounds of goods to produce an actual quantity of
15,300 units. Each unit required 3 pounds of goods. The quantity variance was $10,200
unfavorable and the price variance was $7,140 unfavorable. What was the actual price and
the standard price per pound?
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106.
Standard cost systems variance computations
Livingston Corporation recently implemented a standard cost system. The company’s cost
accountant has provided the following data to perform a variance analysis for May:
Compute the following variances. Indicate whether each variance is favorable (F) or
unfavorable (U):
(a) Materials price variance: $__________
(b) Materials quantity variance: $__________
(c) Labor rate variance: $__________
(d) Labor efficiency variance: $__________
(e) Overhead spending variance: $__________
(f) Overhead volume variance: $__________
107.
Standard cost system-disposition of variances
The cost of goods sold at standard cost for Field Company for 2015 amounted to $425,000
and was 60% of net sales. As of the end of 2015, the total of balances remaining in cost
variance accounts was a net unfavorable cost variance of $8,000, which is not considered
material.
(a) What is the amount shown in Field ‘s 2015 income statement for cost of goods sold?
$_______________
(b) What is the amount reported in Field ‘s 2015 income statement for gross profit on
sales? $_______________
(If required, round your answer to nearest whole dollar value.)
108.
Standard cost system-using variance data
During its first month of operations, the Beech Company charged Work in Process
Inventory with $40,000 of direct materials, $46,000 of direct labor costs, and $80,000 of
manufacturing overhead costs. Beech Company uses a standard cost system, and the
variances at the end of this first month are as follows:
(a) Compute the actual cost of direct materials placed into production during the month.
$_______________
(b) Compute the actual cost of direct labor hours worked during this month.
$_______________
(c) Compute the actual cost of manufacturing overhead for this month. $_______________
(d) Assume that the balance in the Work in Process account is $6,000 at the end of this
first month. If total standard unit cost is $20 per unit, the number of units completed during
this month and transferred to Finished Goods Inventory is _______________ units.
109.
Volume variances
Consider the following statement: “No manager should be held responsible for a volume
variance.” Briefly explain why a volume variance should not be investigated and viewed as
the responsibility of some manager in an organization.
110.
Standard cost system overhead variances
Rogers Manufacturing produces a component part used throughout the computer industry.
Variable overhead is allocated to production at a rate of $5 per unit. The company’s
monthly fixed overhead costs average $30,000. Normal output levels average 40,000 units
per month. During April, Rogers produced 50,000 units and incurred actual overhead costs
of $280,000.
(a) Total overhead applied to production in April amounted to $__________.
(b) Total overhead budgeted in April for the level of output achieved amounted to
$__________.
(c) April’s overhead spending variance was $__________ (favorable/unfavorable).
(d) April’s overhead volume variance was $__________ (favorable/unfavorable).
(e) For which of Rogers’ two overhead variances is the production manager held
responsible?
111.
Standard cost system-overhead variances
Assume the following data for John Company’s August operations.
(a) Compute the amount of overhead applied to Work in Process during August.
$_______________
(b) Compute the total manufacturing overhead budgeted based on hours worked during
August. $_______________
(c) Compute the overhead spending variance for August. Indicate whether favorable (F) or
unfavorable (U). $_______________
(d) Compute the overhead volume variance for August. Indicate whether favorable (F) or
unfavorable (U). $_______________
