Chapter 16 – Fundamentals of Variance Analysis
16–41
16–50. (15 min.) Direct Materials: Clearwater Company.
Actual
Costs
Price
Variance
Actual Inputs
at Standard
Price
AP x 900
$20 x 900
= $18,000
$7,200 F
900 x AP
=
$18,000 – $7,200
AP
=
$12
Chapter 16 – Fundamentals of Variance Analysis
16–42
16–51. (20 min.) Solve for Direct Labor Hours: Thomas Company.
Set up variance model:
Actual
Costs
Price
Variance
Actual Inputs
at Standard
Price
Efficiency
Variance
Flexible Budget
(Standard
Inputs Allowed
for Good
Output)
$21.60 x AQ
$21.00 x AQ
$21.00 x 5,600
= $117,600
??
$16,800 F
Solve for actual input at standard prices:
$117,600 – $16,800 favorable efficiency variance = $100,800.
Solve for AQ:
$21.00 x AQ
=
$100,800
AQ
=
$100,800 ÷ $21.00
AQ
=
4,800 hours
Solve for labor price variance:
Labor price variance
=
($21.60 x 4,800 hours) – $100,800
=
$103,680 – $100,800
Labor price variance
=
$2,880
U
Chapter 16 – Fundamentals of Variance Analysis
16–43
16–52. (20 min.) Overhead Variances: Lima Parts, Inc.
Variable overhead:
Actual
Costs
Price
Variance
Actual Inputs
at Standard
Price
Efficiency
Variance
Flexible Budget
(Standard Inputs
Allowed for Good
Output)
$39,200a
$18 x 2,200
= $39,600
$18 x 2,350
= $42,300
$400 F
$2,700 F
Fixed overhead:
Actual
Costs
Price
Variance
Budget
$19,600b
$17,280
$2,320 U
a $39,200 = (2/3) x $58,800.
b $19,600 = (1/3) x $58,800.
Chapter 16 – Fundamentals of Variance Analysis
16–44
16–53. (40 min.) Manufacturing Variances: Clemson Company.
Direct materials:
Actual
Costs
Price
Variance
Actual Inputs
at Standard
Price
Efficiency
Variance
Flexible Budget
(Standard Inputs
Allowed for Good
Output)
(AP x AQ)
(SP x AQ)
(SP x SQ)
$5.40 x 4,200
gallons
= $22,680
$6 x 4,200
gallons
= $25,200
$6 x 2 gallons x 1,900
units
= $22,800
$2,520 F
$2,400 U
Direct labor:
$30 x 6,400
= $192,000
$24 x 6,400
= $153,600
$24 x 4 hours x 1,900
= $182,400
$38,400 U
$28,800 F
Variable overhead:
$54,000
$6 x 6,400
= $38,400
$6 x 4 hours x 1,900
= $45,600
$15,600 U
$7,200 F
Chapter 16 – Fundamentals of Variance Analysis
16–54. (20 min.) Overhead Cost and Variance Relationships: Fargo Corporation.
a. Variable overhead:
Actual
Costs
Price
Variance
Actual Inputs
at Standard
Price
Efficiency
Variance
Flexible Budget
(Standard Inputs
Allowed for Good
Output)
$508,000
$24a x 21,200
hours
= $508,800
$24 x 21,400 hours
= $513,600
$800 F
$4,800 F
a
$24
=
$513,600 flexible
budget
21,400 hours
b. Fixed overhead:
Actual
Costs
Price
Variance
Budget
Production
Volume
Variance
Applied
$361,600a
$369,600b
$16.80c x
21,400
= $359,520
$8,000 F
$10,080 U
a $361,600 = $869,600 – $508,000
b $369,600 = $361,600 + $8,000 F price variance.
c $16.80
=
$369,600
22,000 hours
Chapter 16 – Fundamentals of Variance Analysis
16–46
16–55. (20 min.) Analysis of Cost Reports: Cabot Plant.
Three possible changes that could make the cost information more meaningful are:
16–56. (25 min.) Change Of Policy To Improve Productivity: Osage Electronics.
Currently the soldering personnel rarely complete the operations in less time than the
standard allows. Assuming that the soldering department is working efficiently, it is not
likely that the tightening of the standards (reducing the allowed time per operation) will
16–57. (20 min.) Ethics and Standard Costs: Farmer Frank’s.
Margaret’s behavior is unethical. Margaret has an obligation to communicate information
Chapter 16 – Fundamentals of Variance Analysis
16–47
16–58. (40 min.) Comprehensive Variance Problem: Trenton Manufacturing
Company.
Direct materials:
Actual
Costs
Price
Variance
Actual Inputs
at Standard
Price
Efficiency
Variance
Flexible Budget
(Standard Inputs
Allowed for Good
Output)
(AP x AQ)
(SP x AQ)
(SP x SQ)
$6.15 x 9,500
yards
= $58,425
$6.00 x 9,500
yards
= $57,000
$6.00 x 20 yards x 500
units
= $60,000
$1,425 U
$3,000 F
Direct labor:
$5.10 x 12,600
hours
= $64,260
$5 x 12,600
hours
= $63,000
$5 x 25 hours
x 500 units
= $62,500
$1,260 U
$500 U
Chapter 16 – Fundamentals of Variance Analysis
16–48
16–58. (continued)
Variable overhead:
Actual Inputs
at Standard
Price
Efficiency
Variance
Flexible Budget
(Standard Inputs
Allowed for
Good Output)
$3a x 12,600
hours
= $37,800
$3 x 25 hours x
500 units
= $37,500
??
$300 U
Fixed overhead:
Budget
Production
Volume
Variance
Applied
$1b x 14,400
hours
= $14,400
$1 x 25 hours x
500 units
= $12,500
??
$1,900 U
Chapter 16 – Fundamentals of Variance Analysis
16–59. (25 min.) Find Actual And Budget Amounts From Variances: Timekiller, Inc.
a. Direct materials:
Actual
Costs
Price
Variance
Actual Inputs
at Standard
Price
Efficiency
Variance
Flexible Budget
(Standard Inputs
Allowed for Good
Output)
(AP x AQ)
(SP x AQ)
(SP x SQ)
$157,500*
$4* x 37,500 kgs*
= $150,000
$4* x 1.5 kgs
x 24,000 units*
= $144,000
$7,500 U*
$6,000 U*
Direct labor:
$16.80 x 5,700*
hours
= $95,760*
$16 x 5,700*
hours
= $91,200
$16 x 0.25* hours
x 24,000* units
= $96,000
$4,560 U*
$4,800 F
Standard cost sheet:
Direct materials, 1.5 kilograms at $4 per kilogram
$6
per game
Direct labor, 0.25 hours at $16 per hour ……………
4
per game
Overhead, 0.25 hours at $12 per hour ………………
3
per game
Total costs ……………………………………………….
$13*
per game
* Given