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40 Minutes, Strong PROBLEM 24.6B
MONOGLUT, INC.
$0.20/oz. × (84,000 ounces - 91,000 ounces) (1,400)$ Unfavorable
Journal entry to record direct materials used in March:
Work in Process Inventory (7,000 units × 12 oz. × $0.20/oz.) 16,800
$12.00/hr. × [(7,000 units × 0.6 hr.) - (7,000 units × 0.50 hr.)]
$12.00/hr. × 700 hrs. 8,400$ Favorable
Journal entry to record direct labor cost for March:
c. Overhead spending variance:
Overhead per flexible budget—7,000 units:
PROBLEM 24.6B
MONOGLUT, INC. (concluded)
PROBLEM 24.7B
COLONIAL FURNITURE CO.
a. (1)
MPV =
(3)
=
Computation of labor rate variance (LRV)
Overhead variances are computed on the following page.
-$9,000 (or $9,000 Unfavorable)
40 Minutes, Strong
Actual Quantity Used × (Standard Price - Actual Price)
Computation of materials price variance (MPV):
(5) Computation of overhead spending variance:
Overhead per flexible budget for 800 units:
(6) Computation of volume variance:
b. General Journal
To record direct materials used during May.
Standard cost = 1,800 units @ $150 = $270,000
Actual cost = 1,800 units @ $147 = $264,600
Standard cost = 1,800 units @ $40.00 = $72,000
Actual cost = 1,800 units @ $40.50 = $72,900
Standard cost = 1,800 units @ $18.00 = $32,400
Actual cost = $34,200
PROBLEM 24.7B
COLONIAL FURNITURE CO. (continued)
PROBLEM 24.7B
COLONIAL FURNITURE CO. (concluded
)
c.
(2) the labor rate variance. The favorable price variance may indicate that the purchasing
department is doing an excellent job of securing materials at advantageous prices. The
favorable labor rate variance may indicate that the number of lower paid inexperienced
workers used during the period was higher than normal. If so, their inexperience may help to
explain the unfavorable labor efficiency variance.
Comments on cost variances:
a.
=
=
=
=
c.
d.
=
=
Thus, the standard hours allowed = $35,000 ÷ $10 = 3,500 hours.
Standard Hourly Rate × (Standard Hours - Actual
Hours)
$10 per hour × (Standard Hours - 4,000 hours)
-$5,000
Based on the journal entry to charge direct labor costs to work in process, the standard
direct labor hours allowed during May is determined as follows:
Thus, the actual hourly rate incurred = -$48,000 ÷ -4,000 = $12 per hour.
Labor Efficiency Variance
$9,500
$7 (Standard Quantity)
*The 1,500 pounds figure was calculated in part a above.
Thus, the standard quantity allowed = 9,500 ÷ 7 = 1,357 pounds.
Based on the journal entry to charge direct labor costs to work in process, the average per
-$1,000 $7 per pound × (Standard Quantity - 1,500 pounds*)
$7 (Standard Quantity) - $10,500
-$1,000
60 Minutes, Strong PROBLEM 24.8B
FODING CORPORATION
Based on the journal entry to charge direct materials costs to work in process, the actual
quantity of material purchased and used during May is determined as follows:
Materials Price
Actual Quantity Used × (Standard Price - Actual Price)
e.
PROBLEM 24.8B
FODING CORPORATION (concluded)
Based on the journal entry to charge overhead costs to work in process, the following
relationships exist:
