143. Hsu Company produces a part with a standard of 5 yds. of material per unit. The standard price of one yard
of material is $8.50. During the month, 8,800 parts were manufactured, using 45,700 yards of material at a cost
of $8.30.
Required:
Determine the (a) price variance, (b) quantity variance, and (c) cost variance.
144. Aquatic Corp.’s standard material requirement to produce a single of Model 2000 is 15 pounds of material
@ $110.00 per pound.
Last month, Aquatic purchased 170,000 pounds of material at a total cost of $17,850,000. They used 162,000
pounds to produce 10,000 units of Model 2000.
Required:
Calculate the material price variance and material quantity variance, and indicate whether each variance is
favorable or unfavorable.
145. If a company records inventory purchases at standard cost and also records purchase price variances,
prepare the journal entry for a purchase of widgets that were bought at $7.45 per unit and have a standard cost
of $7.15. The total amount owed to the vendor for this purchase is $33,525.
146. Rosser Company produces a container that requires 4 yds. of material per unit. The standard price of one
yard of material is $4.50. During the month, 9,500 chairs were manufactured, using 37,300 yards.
Required: Journalize the entry to record the standard direct materials used in production.
147. The following data is given for the Taylor Company:
Budgeted production
1,000 units
Actual production
980 units
Materials:
Standard price per lb
$2.00
Standard pounds per completed unit
12
Actual pounds purchased and used in production
11,800
Actual price paid for materials
$23,000
Labor:
Standard hourly labor rate
$14 per hour
Standard hours allowed per completed unit
4.5
Actual labor hours worked
4,560
Actual total labor costs
$62,928
Overhead:
Actual and budgeted fixed overhead
$27,000
Standard variable overhead rate
$3.50 per standard labor hour
Actual variable overhead costs
$15,500
Overhead is applied on standard labor hours.
Compute the direct material price and quantity variances for Taylor Company.
Work in Process (9,500 x 4 x $4.50)
171,000
Direct Materials Quantity Variance
3,150
Materials (37,300 x $4.50)
167,850
148. The following data is given for the Taylor Company:
Budgeted production
1,000 units
Actual production
980 units
Materials:
Standard price per lb
$2.00
Standard pounds per completed unit
12
Actual pounds purchased and used in production
11,800
Actual price paid for materials
$23,000
Labor:
Standard hourly labor rate
$14 per hour
Standard hours allowed per completed unit
4.5
Actual labor hours worked
4,560
Actual total labor costs
$62,928
Overhead:
Actual and budgeted fixed overhead
$27,000
Standard variable overhead rate
$3.50 per standard labor hour
Actual variable overhead costs
$15,500
Overhead is applied on standard labor hours.
Compute the direct labor rate and time variances for Taylor Company.
149. Define ideal and currently attainable standards. Which type of standard should be used and why?
150. Define nonfinancial performance measures. What are they used for and what are some common
examples?
151. Match the following terms with the best definition given.
Nonfinancial performance
2. An example is number of customer
3. Actual cost > standard cost at actual
4. Actual cost < standard cost at actual
152. Match the following terms with the best definition given.
1. (Actual price – Standard price) x Actual
Direct labor time
2. (Actual rate per hour – Standard rate per hour)
Direct labor rate
3. (Actual direct hours – Standard direct hours) x
Direct materials price
4. (Actual quantity – Standard quantity) x
Direct materials quantity
5. Standard variable overhead for actual units
Budgeted variable factory
153. Compute the standard cost for one hat, based on the following standards for each hat:
Standard Material Quantity:
3/4 yard of fabric at $5.00 per yard
Standard Labor:
2 hours at $5.75 per hour
Factory Overhead:
$3.20 per direct labor hour
Standard Material:
3/4 yard at $5.00 per yard
$ 3.75
Standard Labor:
2 hours at $5.75 per hour
11.50
Total standard cost
$21.65
154. Standard and actual costs for direct materials for the manufacture of 1,000 units of product were as
follows:
Actual costs
1,550 lbs. @ $9.10
Standard costs
1,600 lbs. @ $9.00
Determine the (a) quantity variance, (b) price variance, and (c) total direct materials cost variance.
Standard quantity
1,600 lbs.
Quantity variance—favorable
50 lbs. favorable
´ standard price
$ 9.00
Actual price
$ 9.10 per lb.
Price variance
$ .10 per lb. unfavorable
´ actual quantity
1,550
$ 155 unfavorable
Quantity variance
$ 450 favorable
Price variance
155 unfavorable
155. Standard and actual costs for direct labor for the manufacture of 1,000 units of product were as follows:
Actual costs
950 hours @ $37.00
Standard costs
975 hours @ $36.00
Determine the (a) time variance, (b) rate variance, and (c) total direct labor cost variance.
Standard time
975 hours
Time variance—favorable
25 hours
´ standard rate
$ 36
Actual rate
$37.00 per hour
Rate variance—unfavorable
$ 1.00 per hour
´ actual time
950
$ 950 unfavorable
Time variance
$900 favorable
Rate variance
950 unfavorable
156. The following information is for the standard and actual costs for the Happy Corporation.
Standard Costs:
Budgeted units of production – 16,000 (80% of capacity)
Standard labor hours per unit – 4
Standard labor rate – $26 per hour
Standard material per unit – 8 lbs.
Standard material cost – $ 12 per pound
Standard variable overhead rate – $15 per labor hour
Budgeted fixed overhead – $640,000
Fixed overhead rate is based on budgeted labor hours at 80% capacity.
Actual Cost:
Actual production – 16,500 units
Actual material purchased and used – 130,000 pounds
Actual total material cost – $1,600,000
Actual labor – 65,000 hours
Actual total labor costs – $1,700,000
Actual variable overhead – $1,000,000
Actual fixed overhead – $640,000
Actual variable overhead – $1,000,000
Determine: (a) the quantity variance, price variance, and total direct materials cost variance; (b) the time
variance, rate variance, and total direct labor cost variance; and (c) the volume variance, controllable variance,
and total factory overhead cost variance.
157. The Finishing Department of Pinnacle Manufacturing Co. prepared the following factory overhead cost
budget for October of the current year, during which it expected to operate at a 100% capacity of 10,000
machine hours:
Variable cost:
Indirect factory wages
$18,000
Power and light
12,000
Indirect materials
4,000
Total variable cost
$34,000
Fixed cost:
Supervisory salaries
$12,000
Depreciation of plant and
equipment
8,800
Insurance and property taxes
3,200
Total fixed cost
24,000
Total factory overhead
$58,000
During October, the plant was operated for 9,000 machine hours and the factory overhead costs incurred were as follows: indirect factory wages,
$16,400; power and light, $10,000; indirect materials, $3,000; supervisory salaries, $12,000; depreciation of plant and equipment, $8,800; insurance
and property taxes, $3,200.
Prepare a factory overhead cost variance report for October. (The budgeted amounts for actual amount produced should be based on 9,000 machine
hours.)
Productive capacity for the month
10,000 hours
Actual production for the month
9,000 hours
Variances
Budget
Actual
Favorable
Unfavorable
Variable cost:
Indirect factory wages
$16,200
$16,400
$ 200
Power and light
10,800
10,000
$ 800
Indirect materials
3,600
3,000
Total variable cost
$30,600
$29,400
Fixed costs:
Supervisory salaries
$12,000
$12,000
Depreciation of plant
and equipment
8,800
8,800
Insurance and
property taxes
3,200
3,200
Total fixed cost
$24,000
$24,000
Total factory overhead
cost
$54,600
$53,400
Total controllable
variances
$1,400
$ 200
Net controllable
variance—favorable
$1,200
Volume variance—unfavorable:
Idle hours at the standard
rate for fixed overhead—
1,000 ´ $2.40
2,400
158. The following information relates to manufacturing overhead for the Chapman Company:
Standards:
Total fixed factory overhead – $450,000
Estimated production – 25,000 units (100% of capacity)
Overhead rates are based on machine hours.
Standard hours allowed per unit produced – 2
Fixed overhead rate – $9.00 per machine hour
Variable overhead rate – $3.50 per hour
Actual:
Fixed factory overhead – $450,000
Production – 24,000 units
Variable overhead – $170,000
Required:
(a)
Compute the volume variance.
(b)
Compute the controllable variance.
(c)
Compute the total factory overhead cost variance.
Standard for product produced (24,000 units)
48,000 hours
Productive capacity not used
2,000 hours
Standard fixed factory overhead cost rate
$ 9.00 per hour
Actual Variable overhead incurred
$170,000
Budgeted factory overhead for standard
24,000 ´ 2 ´ $3.50 =
168,000
Controllable variance (unfavorable)
$ 2,000
Volume variance (unfavorable)
$18,000
Controllable variance (unfavorable)
2,000
Cost variance (unfavorable)
$20,000
159. Using the following information, prepare a factory overhead flexible budget for Andover Company where
the total factory overhead cost is $75,500 at normal capacity (100%). Include capacity at 75%, 90%, 100%, and
110%. Total variable cost is $6.25 per unit and total fixed costs are $38,000. The information is for month
ended August 31, 2012. (Hint: Determine units produced at normal capacity.)
160. Prepare an income statement (through income before income tax) for presentation to management, using
the following data from the records of Greenway Manufacturing Company for November of the current year:
Administrative expenses
$ 73,500
Cost of goods sold (at standard)
470,000
Direct materials quantity variance-favorable
1,200
Direct materials price variance-favorable
2,400
Direct labor time variance-unfavorable
900
Direct labor rate variance-favorable
500
Factory overhead volume variance-unfavorable
10,000
Factory overhead controllable variance-favorable
1,500
Sales
950,000
Selling expenses
165,800
Sales
$950,000
Cost of goods sold—at standard
470,000
Gross profit—at standard
$480,000
Less variances from standard cost:
Favorable
Unfavorable
Direct materials price
$2,400
Direct materials quantity
1,200
Direct labor rate
500
Direct labor time
900
Factory overhead controllable
1,500
Factory overhead volume
10,000
5,300
Gross profit
$474,700
Operating expenses:
Selling expenses
$165,800
Percent of normal capacity
75%
90%
100%
110%
Units produced
4,500
5,400
X
6,600
Variable costs per unit $6.25
$28,125
$33,750
$37,500
$41,250
Fixed costs
38,000
38,000
38,000
38,000
Total factory overhead cost
$66,125
$71,750
$75,500
$79,250
161. Robin Company purchased and used 520 pounds of direct materials to produce a product with a 510 pound
standard direct materials requirement. The standard materials price is $2.10 per pound. The actual materials
price was $2.00 per pound. Prepare the journal entries to record (1) the purchase of the materials and (2) the
material entering production. Robin records standards and variances in the general ledger.
162. Robin Company purchased and used 500 pounds of direct materials to produce a product with a 520 pound
standard direct materials requirement. The standard materials price is $1.90 per pound. The actual materials
price was $2.00 per pound. Prepare the journal entries to record (1) the purchase of the materials and (2) the
material entering production. Robin records standards and variances in the general ledger.