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Title: Exercise 23-9A
QA_Ori:
1.
Goods in Process Inventory 288,000
To record the favorable price and quantity variances.
* This price variance can alternatively be computed and recorded when the direct
materials are
purchased.
2.
To close the unfavorable price and favorable quantity
variances to cost of goods sold.
3. The $24,000 materials quantity variance should be investigated because of its
QA_Edit:
Title: Exercise 23-10
QA_Ori:
Information given
Planned units to be produced = 80% x 50,000 capacity = 40,000 units
1. Total overhead planned at 80% level (25,000 direct labor hours)
Predetermined
Cost
Cost per
Hour
2. Total overhead variance
Total actual overhead (given) $305,000
Title: Exercise 23-11
QA_Ori:
1. Preliminary variance computations
Variable overhead spending and efficiency variances
Actual Overhead
AH x AVR AH x SVR
Applied Overhead
SH x SVR
(Spending variance)
(Efficiency variance)
$ *
(Total variable overhead variance)
Fixed overhead spending and volume variances
Actual Overhead Budgeted Overhead Applied Overhead
(Spending variance)
(Volume variance)
$ *
(Total fixed overhead variance)
* Not computable from information given
2. Overhead controllable variance*
Flexible budget overhead
5
Fixed (given)
Overhead controllable variance $ 14,375 U
* Alternative solution approach: We know the overhead controllable variance
is equal to the total overhead variance less the overhead volume variance. Then,
using the results from parts 1 and 2, we can compute the overhead controllable
variance as
Title: Exercise 23-12
QA_Ori:
1. Sales price and sales volume variances
Sales Actual Sales Flexible Budget Fixed Budget
Units 350 350 365
2. Interpretation
The $35,000 favorable sales price variance implies it sold computers for a higher
Title: Exercise 23-13
QA_Ori:
a. 4
Title: Exercise 23-14
QA_Ori:
Title: Exercise 23-15
QA_Ori:
Following management by exception, the company should focus on those
variances that exhibit the greatest differences from the standard. This would
Title: Exercise 23-16
QA_Ori:
Part 1
Direct materials price variance:
Actual cost of direct materials used (16,000 x $4.05) $ 64,800
Direct materials quantity variance:
Actual quantity used x Standard price (16,000 x $4.00) $ 64,000
Part 2
Direct labor rate variance:
Actual hours x Actual rate per hour (5,545 x $19.00***) $105,355
Direct labor efficiency variance:
Actual hours x Standard rate per hour (5,545 x $20.00) $110,900
Title: Problem 23-1A
QA_Ori:
Part 1 Direct Materials Variances
Direct materials cost variances
Actual units at actual cost [1,615,000 lbs. @ $4.10] $6,621,500
Direct Materials Price and Quantity Variances
Actual Cost Standard Cost
AQ x AP AQ x SP SQ x SP
(Price variance)
(Quantity variance)
(Total materials variance)
Part 2 Direct Labor Variances
Direct labor cost variances
Actual units at actual cost [265,000 hrs. @ $13.75] $3,643,750
Direct Labor Rate and Efficiency Variances
Actual Cost
AH x AR AH x SR
Standard Cost
SH x SR
(Rate variance)
(Efficiency variance)
(Total labor variance)
Part 3 Overhead Variances
Controllable variance
Actual overhead [$2,350,000 + $2,200,000] $4,550,000
F
Fixed overhead volume variance
F
Title: Problem 23-3A
Part 1
Variable or Fixed Classification
Amount
per unit
Variable sales (total divided by 15,000 units)
Sales $ 200.00
Variable costs (total divided by 15,000 units)
Direct materials $ 65.00
Fixed costs
Depreciation—Plant equipment $ 300,000
Utilities ($195,000 - $45,000 variable) 150,000
Part 2
PHOENIX COMPANY
Flexible Budgets
For Year Ended December 31, 2013
Flexible Budget Flexible Flexible
Variable
Amount
per Unit
Total
Fixed
Cost
Budget for
Unit Sales
of 14,000
Budget for
Unit Sales
of 16,000
Sales
$200.00 $2,800,000 $3,200,000
Variable costs
Direct materials 65.00 910,000 1,040,000
300,000
Utilities 150,000 150,000 150,000
Part 3
Operating income increase for a 15,000 to 18,000 unit sales increase
Possible sales (units) 18,000 Units
*Alternate solution format
Unit increase 3,000 Unit
s
Part 4
Operating income (loss) at 12,000 units
Title: Problem 23-4A
QA_Ori:
Part 1
PHOENIX COMPANY
Flexible Budget Performance Report
For Year Ended December 31, 2013
Flexible Actual
Budget Results Variances*
Sales (18,000 units) $3,600,000 $3,648,000 $48,000 F
Variable costs
Direct materials 1,170,000 1,185,000 15,000 U
Direct labor 270,000 278,000 8,000 U
*F = Favorable variance; and U = Unfavorable variance.
Part 2
Analysis of sales variance
Total Per unit
Budgeted sales $3,600,000 $200.00
Interpretation: The sales variance is favorable because the actual price was
higher than planned.
* (rounded)
Analysis of direct materials variance
Total Per unit
Budgeted materials $1,170,000 $ 65.00
Interpretation: The direct materials variance is unfavorable for two possible
