Chapter 22(7): Performance Evaluation Using Variances from Standard Costs
143.
Compute the direct labor rate and time variances for Taylor Company.
144.
Standard and actual costs for direct materials for the manufacture of 1,000 units of product were as follows:
Actual costs 1,550 lbs. at $9.10
Standard costs 1,600 lbs. at $9.00
Determine the direct materials (a) quantity variance, (b) price variance, and (c) total cost variance.
145.
Standard and actual costs for direct labor for the manufacture of 300 units of product were as follows:
Actual costs 125 hours @ $54.00
Standard costs 131 hours @ $53.00
Determine the direct labor (a) time variance, (b) rate variance, and (c) total cost variance.
146.
Standard and actual costs for direct labor for the manufacture of 1,000 units of product were as follows:
Actual costs 950 hours at $37
Standard costs 975 hours at $36
Determine the direct labor (a) time variance, (b) rate variance, and (c) total direct labor cost variance.
147.
The following information is for the standard and actual costs for the Happy Corporation:
Standard Costs:
Budgeted units of production – 16,000 [80% (or normal) 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% (or normal) 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
Chapter 22(7): Performance Evaluation Using Variances from Standard Costs
Determine: (a) the direct materials quantity variance, price variance, and total cost variance; (b) the direct labor
time
variance, rate variance, and total cost variance; and (c) the factory overhead volume variance, controllable
variance,
and total factory overhead cost variance. (Note: If following text formulas, do not round interim
calculations.)
148.
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 costs:
Indirect factory wages
$18,000
Power and light
12,000
Indirect materials
4,000
Total variable cost
$34,000
Fixed costs:
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
Actual production for the month
Variable cost:
Indirect factory wages
Power and light
Indirect materials
Total variable cost
Fixed costs:
Supervisory salaries
Insurance and property taxes
Total fixed cost
Total factory overhead cost
Total controllable variances
Volume variance—unfavorable:
149.
Tucker Company produced 8,900 units of product that required 3.25 standard hours per unit. The standard variable
overhead cost per unit is $4.00 per hour. The actual variable factory overhead was $111,000.
Determine the variable factory overhead controllable variance.
150.
Titus Company produced 8,900 units of a product that required 3.25 standard hours per unit. The standard fixed
overhead cost per unit is $1.20 per hour at 29,000 hours, which is 100% of normal capacity.
Determine the fixed factory overhead volume variance.
151.
Greyson Company produced 8,300 units of product that required 4.25 standard hours per unit. Determine the
standard fixed overhead cost per unit at 27,000 hours, which is 100% of normal capacity, if the favorable fixed
factory overhead volume variance is $14,895.
152.
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 normal 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
Compute (a) the fixed factory overhead volume variance, (b) the variable factory overhead controllable variance,
and
(c) the total factory overhead cost variance.
153.
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. (Hint: Determine units produced at normal capacity.)
154.
Using the following information, prepare a factory overhead flexible budget for Jacob Company where the total
factory overhead cost is $206,500 at normal capacity (100%). Include capacity at 60%, 80%, 100%, and 120%.
Total
variable cost is $15.25 per unit and total fixed costs are $54,000. The information is for month ended October
31. (Hint: Determine units produced at normal capacity.)
155.
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
Cost of goods sold—at standard
Gross profit—at standard
Favorable
Less variances from standard cost:
Operating expenses:
Income before income tax
156.
Oak Company produces a chair that requires 6 yards of material per unit. The standard price of one yard of
material
is $7.50. During the month, 8,500 chairs were manufactured, using 48,875 yards.
Journalize the entry to record the standard direct materials used in production.
157.
Prepare an income statement for the year ended December 31, through the gross profit for Baxter Company using
the
following information. Baxter Company sold 8,600 units at $125 per unit. Normal production is 9,000 units. (Do
not
round fixed overhead rate calculation when determining fixed factory overhead volume variance.)
Standard: 5 yards per unit at $6.30 per yard
Actual yards used: 43,240 yards
at $6.25 per yard
Standard: 2.25 hours per unit at $15.00
Actual hours worked: 19,100 at
$14.90 per hour
Standard: variable overhead $1.05 per unit
Standard: fixed overhead $211,500
(budgeted and actual amount)
Actual total factory overhead:
$235,500
Sales
Cost of goods sold—at
Gross profit—at standard
Less variances from
Direct materials price
Direct labor rate
Direct labor time
Gross profit—actual
158.
A company records inventory purchases at standard cost and also records purchase price variances. Prepare
the
journal entry for a purchase of 6,000 widgets that were bought at $8.00 and have a standard cost of $8.15.
159.
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.
160.
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.
161.
Titus Company purchased and used 650 pounds of tomatoes (direct materials) to produce a taco sauce with a 635
pound standard direct materials requirement. The standard materials price is $22.40 per pound. The actual price of
the tomatoes was $22.20 per pound. Prepare the journal entries to record (1) the purchase of the tomatoes and (2)
the
tomatoes entering production. Titus records standards and variances in the general ledger.
162.
Rosser Company produces a container that requires 4 yards 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 of material.
Journalize the entry to record the standard direct materials used in production.
163.
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.
164.
Define nonfinancial performance measures. What are they used for and what are some common examples?
165.
The following are inputs and outputs to the help desk:
operator training
number of calls per day
maintenance of computer equipment
number of operators
number of complaints
Identify whether each is an input or an output to the help desk.
Chapter 22(7): Performance Evaluation Using Variances from Standard Costs
Match the following descriptions with the term (a-e) it describes:
a.
Ideal standard
b.
Nonfinancial performance measure
c.
Currently attainable standard
d.
Unfavorable cost variance
e.
Favorable cost variance
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 – 23–01
ACCT.WARD.16.23-02 – 23–02
ACCT.WARD.16.23-06 – 23–06
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 – Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 – Budgeting and Responsibility
ACCT.IMA.09 – Performance Measurement
BUSPROG: Analytic
166.
an example is the number of customer complaints
167.
actual cost > standard cost at actual volumes
168.
actual cost < standard cost at actual volumes
169.
normal standard
170.
theoretical standard
Chapter 22(7): Performance Evaluation Using Variances from Standard Costs
Match the following formulas or descriptions with the term (a-e) it defines.
a.
Direct materials price variance
b.
Direct labor rate variance
c.
Direct labor time variance
d.
Direct materials quantity variance
e.
Budgeted variable factory overhead
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-03 – 23–03
ACCT.WARD.16.23-04 – 23–04
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 – Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 – Budgeting and Responsibility
ACCT.IMA.09 –
Performance Measurement
BUSPROG: Analytic
171.
(Actual direct hours – Standard direct hours) × Standard rate per hour
172.
(Actual rate per hour – Standard rate per hour) × Actual hours
173.
(Actual price – Standard price) × Actual quantity
174.
(Actual quantity – Standard quantity) × Standard price
175.
Standard variable overhead for actual units produced