1) Wilson Company developed the following standard costs for its product for 2014:
WILSON COMPANY
Standard Cost Card
Cost ElementsStandard QuantityStandard Price=Standard Cost
Direct materials4 pounds$ 5$20
Direct labor2 hours1020
Variable overhead2 hours48
Fixed overhead2 hours2 4
$52
The company expected to work at the 120,000 direct labor hours level of activity and
produce 60,000 units of product.
Actual results for 2014 were as follows:
56,800 units of product were actually produced.
Direct labor costs were $1,092,000 for 112,000 direct labor hours actually worked.
Actual direct materials purchased and used during the year cost $1,085,700 for 231,000
pounds.
Total actual manufacturing overhead costs were $682,000.
Instructions
Compute the following variances for Wilson Company for 2014 and indicate whether
the variance is favorable or unfavorable.
1>Direct materials price variance.
2>Direct materials quantity variance.
3>Direct labor price variance.
4>Direct labor quantity variance.
5>Overhead controllable variance.
6>Overhead volume variance.
2) Habbani Company issued 9%, 5-year, $1,000,000 par value bonds that pay interest
semiannually on October 1 and April 1 . The bonds are dated April 1, 2014, and are
issued on that date. The market rate of interest for such bonds on April 1, 2014, is 8%.
What cash proceeds did Habbani Company receive from issuance of the bonds? (Round
intermediate and final answers to the nearest dollar.)
3) Identify which of the following are temporary accounts of Sabrina Company.
(1)Owners Capital
(2)Owners Drawings
(3)Equipment
(4)Accumulated Depreciation
(5)Depreciation Expense
4) Presented below are selected transactions for Werley Company for 2014 .
Jan.1Received $9,000 scrap value on retirement of machinery that was purchased on
January 1, 2004. The machine cost $90,000 on that date, and had a useful life of 10
years with no salvage value.
April30Sold a equipment for $34,000 that was purchased on January 1, 2011. The
equipment cost $90,000, and had a useful life of 5 years with no salvage value.
Dec.31Discarded a business automobile that was purchased on April 1, 2010. The car
cost $27,000 and was depreciated on a 5-year useful life with a salvage value of $2,000.
Instructions
Journalize all entries required as a result of the above transactions. Werley Company
uses the straight-line method of depreciation and has recorded depreciation through
December 31, 2013 .
5) Cryers Frozen Goods purchased a machine on January 1, 2014, at a total cost of
$500,000. The machine has an estimated useful life of 5 years or 900,000 units of
output and a salvage value of $50,000.
Instructions: Complete the following table by presenting the annual depreciation
expense for the years 2014 and 2015, under the indicated depreciation methods.
Assume actual activity in terms of units of output was: 201450,000 units and
201580,000 units.
Annual Depreciation Expense
20142015
Straight-Line:$$
(Supporting Computations)
Double-Declining-Balance:$$
(Supporting Computations)
Units-of-Activity:$$
(Supporting Computations)