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g
.
651,504 651,504*
PROBLEM 24.4A
SVEN ENTERPRISES (concluded)
*The $651,504 figure equals the total direct materials, direct labor, and manufacturing
overhead charged to production at standard cost during April ($629,748 + $17,493 +
$4,263).
Entry to transfer the 147 batches of puppy meal produced in April to finished goods:
Finished Goods Inventory (at standard cost)
Work in Process Inventory (at standard cost)
To transfer 147 batches of puppy meal to finished goods in April.
a. =
=
45 Minutes, Strong
Materials Price Variance
PROBLEM 24.5A
SLICK CORPORATION
Actual Quantity Used × (Standard Price - Actual Price)
16,500 gallons × ($1.30 - $1.25*)
c.
$2,600
Costs Applied
Overhead
Problem 24.5A
SLICK CORPORATION (concluded)
Overhead variances:
Actual Overhead
Costs Incurred Standard Overhead
Costs Allowed
Fixed
Fixed
$2,200
40 Minutes, Strong PROBLEM 24.6A
POLYGLAZE, INC.
a. Materials price variance:
Actual Quantity × (Standard Price - Actual Price)
(8,000 units × 11 ounces) × ($0.15/oz. - $0.16/oz.) (880)$ Unfavorable
Materials quantity variance:
Journal entry to record direct materials used in June:
Work in Process Inventory (8,000 units × 10 oz. × $0.15/oz.) 12,000
Materials Price Variance 880
b. Labor rate variance:
Labor efficiency variance:
Standard Hourly Rate × (Standard Hours - Actual Hours)
Journal entry to record direct labor cost for June:
PROBLEM 24.6A
POLYGLAZE, INC. (concluded)
c. Overhead spending variance:
Overhead per flexible budget—8,000 units:
PROBLEM 24.7
A
HERITAGE FURNITURE CO.
a. (1)
(2)
MQV =
(3)
LRV =
Computation of labor rate variance (LRV)
Computation of materials quantity variance (MQV):
Standard Price × (Standard Quantity - Actual Quantity)
Actual Hours × (Standard Hourly Rate - Actual Hourly Rate)
40 Minutes, Strong
Computation of materials price variance (MPV):
PROBLEM 24.7A
HERITAGE FURNITURE CO.
(
continued
)
(5) Computation of overhead spending variance:
Overhead per flexible budget for 800 units:
(6) Computation of volume variance:
Overhead applied using standard cost
($800 units × $22 per unit) 17,600$
Overhead per flexible budget for 800 units
(computed above) 20,600
Materials Inventory (at actual) 105,600
To record direct materials used during July.
Standard cost = 800 units @ $130 = $104,000
Actual cost = 800 units @ $132 = $105,600
31 Work in Process Inventory (at standard) 32,000
Actual cost = 800 units @ $42.90 = $34,320
31 Work in Process Inventory (at standard) 17,600
Volume Variance 3,000
Overhead Spending Variance 2,120
Manufacturing Overhead (actual cost) 18,480
PROBLEM 24.7
A
HERITAGE FURNITURE CO. (concluded)
c.
The company appears to be having significant problems in two areas. First, the large
unfavorable materials quantity variance ($10,400) indicates that far more material is being
used in the production process than is provided for in the cost standards. Assuming that
the cost standards are reasonable, the quantity of materials being used is excessive. Second,
the overhead spending variance. The favorable materials price variance ($8,800) may
indicate that the purchasing department is doing an excellent job of securing materials at
advantageous prices. The overhead spending variance may indicate that the production
manager is doing very well at controlling spending on overhead. However, these favorable
variances may be closely linked to the company’s problems in the areas of materials usage
positions, which may be contributing to the inefficient use of materials and the low
productivity of direct workers. Thus, management should thoroughly investigate the causes
of these cost variances.
Comments on cost variances:
a.
60 Minutes, Strong PROBLEM 24.8A
RIPLEY COPRORATION
Based on the journal entry to charge direct materials costs to work in process, the actual
quantity of material purchased and used during June is determined as follows:
e.
g
. 5,000
8,200 1,200
Problem 24.8A
RILEY CORPORATION (concluded)
Overhead
Based on the journal entry to charge overhead costs to work in process, the following
relationships exist:
Standard OverheadActual Overhead
Costs Allowed Costs AppliedCosts Incurred
Overhead Volume Variance (favorable) ……………………………
…
Materials Quantity Variance (unfavorable) ……………………………………
…
Materials Price Variance (favorable) ………………………………
…
