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Actual Var.
Conv. Costs
Budgeted Var. Conv. Costs
at Actual MHs
Applied Var.
Conv. Costs
$6.50 × 83,000
$6.50 × 86,100
$551,230
$539,500
$559,650
$11,730 U
$20,150 F
Var. Conv. Spending Variance
Var. Conv. Efficiency Variance
$8,420 F
Total Variable Conversion Variance
Expected annual fixed conversion costs = $16.00 × 1,008,600 = $16,137,600
Expected monthly fixed conversion costs = $16,137,600 ÷ 12 = $1,344,800
Actual Fixed
Conv. Costs
Budgeted Fixed Conv. Costs
Applied Fixed
Conv. Costs
$16 × 86,100
$1,330,000
$1,344,800
$1,377,600
$14,800 F
$32,800 F
Fixed Conv. Spending Variance
Fixed Conv. Efficiency Variance
$47,600 F
Total Fixed Conversion Variance
Actual Conv. Costs
Budget @ Actual
Budget @ Std.
Applied
$551,230 + $1,330,000 $539,500 + $1,344,800 $559,650 + $1,344,800 $559,650 + $1,377,600
$1,881,230
$1,884,300
$1,904,450
$1,937,250
$3,070 F
$20,150 F
$32,800 F
OH Spending Var.
OH Efficiency Var.
Volume Var.
$56,020
Total OH Variance
44. a. Standard mix = 50% pecans and 50% cashews
Total pounds used = 15,554 + 12,726 = 28,280
Actual mix = 15,554 ÷ 28,280 or 55% pecans; thus, 45% cashews
$84,840
Standard price & mix; actual quantity of cashews = $8.00 × 0.50 × 28,280 =
$113,120
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AM × AQ × AP
AM × AQ × SP
SM × AQ × SP
SM × SQ × SP
P $ 90,213.20
C 108,171.00
$198,384.20
$ 93,324
$ 84,840
$ 81,000
101,808
113,120
108,000
$195,132
$197,960
$189,000
$3,252.20 U
$2,828 F
$8,960 U
Material Price Var.
Material Mix Var.
Material Yield Var.
45. Let E represent engineers, and D represent draftspeople
Total time = 400 + 600 = 1,000; E = 40% and D = 60%
Actual mix = 50% E and 50% D
Standard quantity (hours allowed) = 1,000 hrs.
Standard rate & mix; actual quantity of E = $60 × 0.4 × 1,000 = $24,000
AM × AQ × AP
AM × AQ × SP
SM × AQ × SP
SM × SQ × SP
E $32,500
$30,000
$24,000
$24,000
D 16,000
15,000
18,000
18,000
$48,500
$45,000
$42,000
$42,000
$3,500 U
$3,000 U
$0
Labor Rate Var.
Labor Mix Var.
Labor Yield Var.
46. a. Total actual hours = 900 + 2,520 + 1,500 = 4,920
Standard hours = 1,008 + 2,772 + 1,260 = 5,040
Standard rate; actual mix & hours:
Admin. assistant ($30 × 900)
$ 27,000
Paralegal ($60 × 2,520)
151,200
Attorney ($125 × 1,500)
187,500
$365,700
Standard rate & mix; actual hours:
Admin. assistant ($30 × 0.2 × 4,920)
$ 29,520
Paralegal ($60 × 0.55 × 4,920)
162,360
Attorney ($125 × 0.25 × 4,920)
153,750
$345,630
Standard rate, mix, & hours:
Admin. assistant ($30 × 1,008)
$ 30,240
Paralegal ($60 × 2,772)
166,320
Attorney ($125 × 1,260)
157,500
$354,060
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AM × AH × SR
SM × AH × SR
SM × SH × SR
$365,700
$345,630
$354,060
$20,070 U
$8,430 F
Labor Mix Variance
Labor Yield Variance
(1)
(2)
tive assistants and paralegals (combined) was 69.5 percent; at standard, the
administrative assistant and paralegal labor content should be 75 percent.
(CMA adapted)
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PROBLEMS
47. a. Standard quantity of material = 48,000 × 1.85 = 88,800 pounds
Standard quantity of labor time = 48,000 × 0.04 = 1,920 hours
b.
AP × AQp
SP × AQp
$3.15 × 100,000
$3.50 × 100,000
$315,000
$350,000
$35,000 F
Mat. Purch. Price Variance
SP × AQu
SP × SQ
$3.50 × 95,000
$3.50 × 88,800
$332,500
$310,800
$21,700 U
Material Quantity Variance
AP × AQ
SP × AQ
SP × SQ
$12.10 × 2,200
$12.00 × 2,200
$12.00 × 1,920
$26,620
$26,400
$23,040
$220 U
$3,360 U
Labor Rate Variance
Labor Efficiency Variance
$3,580 U
Total Labor Variance
c. Raw Material Inventory 350,000
Material Price Variance 35,000
Accounts Payable 315,000
Work in Process Inventory 310,800
product.
48. a. Material price variance = (AP × AQp) – (SP × AQp)
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Standard quantity = 100,000 × 0.25 = 25,000 lbs.
Standard hours = 100,000 × 1/20 hour = 5,000 hours
AP × AQ
SP × AQ
SP × SQ
$8.80 × 5,320
$9.00 × 5,320
$9.00 × 5,000
$46,816
$47,880
$45,000
$1,064 F
$2,880 U
Labor Rate Variance
Labor Efficiency Variance
$1,816 U
Total Labor Variance
b. Raw Material Inventory
180,000
Material Price Variance
4,800
Accounts Payable
184,800
To record raw material purchased in
October at standard cost
Work in Process Inventory
74,400
Material Quantity Variance
600
Raw Material Inventory
75,000
To record issuance of raw material at
standard cost during October
Work in Process Inventory
45,000
Labor Efficiency Variance
2,880
Labor Rate Variance
1,064
Cash (Salaries/Wages Payable)
46,816
To record October direct labor payroll
and variances
49. a. Material
Fiberglass:
Price variance = (AP × AQp) – (SP × AQp)
Quantity variance = (SP × AQu) – (SP × SQ)
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Paint (4 quarts = 1 gallon)
Quantity variance = (SP × AQu) – (SP × SQ)
Trim:
Price variance = (AP × AQp) – (SP × AQp)
Quantity variance = (SP × AQu) – (SP × SQ)
Labor
AP × AQ
SP × AQ
SP × SQ
$23.50 × 23,850
$25.00 × 23,850
$25.00 × 24,000
$560,475
$596,250
$600,000
$35,775 F
$3,750 F
Labor Rate Variance
Labor Efficiency Variance
$39,525 F
Total Labor Variance
50. a. (1) Standard quantity of material: 300,000 × 0.85 = 255,000 sq. ft.
(2)
AQ of material used:
SQ × Standard price (255,000 × $0.80)
$204,000
Material quantity variance
1,440 U
(Actual quantity used × Standard price)
$205,440
(3) Actual quantity purchased: 256,800 + 2,500 = 259,300 sq. ft.
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(4) Actual price of material:
(Actual quantity purchased)(Actual – Standard price) = MPV
(5) SH = 300,000 ÷ 1,000 = 300 hours
(7) Labor rate variance:
Total labor variance = Labor rate variance + Labor efficiency variance
(8) Standard labor rate
$15.00
Labor rate variance ($63 ÷ 315)
(0.20)
Actual labor rate
$15.20
b. Actual wages payable = 315 DLHs × $15.20 = $4,788
Work in Process Inventory 204,000
Material Quantity Variance 1,440
51. a. 49,600 ÷ 3.1 = 16,000 units produced in September
b. Material price variance = (AP × AQp) – (SP × AQp)
Material quantity variance = (SP × AQu) – (SP × SQ)
c. 4,030 actual hours – 30 above standard = 4,000 standard hours
.
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d.
AP × AQ
SP × AQ
SP × SQ
$9.80 × 4,030
$9.80 × 4,030
$9.80 × 4,000
$39,494
$39,494
$39,200
$0
$294 U
Labor Rate Variance
Labor Efficiency Variance
$294 U
Total Labor Variance
e. Raw Material Inventory
55,000
Material Price Variance
2,500
Accounts Payable
52,500
To record purchases for September
Work in Process Inventory
54,560
Raw Material Inventory
53,460
Material Quantity Variance
1,100
To record issuances of direct material for
September
Work in Process Inventory
39,200
Labor Efficiency Variance
294
Cash (Salaries/Wages Payable)
39,494
To record direct labor payroll and the
variance accounts for September
52. a. Material price variance = (AP × AQ) – (SP × AQ)
Material quantity variance = (SP × AQ) – (SP × SQ)
Labor rate variance = (AP × AQ) – (SP × AQ)
Labor efficiency variance = (SP × AQ) – (SP × SQ)
*Standard quantity = 17,200 × 1.5 = 25,800
2007: $4.00 × 1.04 = $4.16
2008: $4.16 × 1.04 = $4.33
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Purchased at a 5% volume discount, $5.06 × 0.95 = $4.81 per yard
Material quantity standard: 3 yards – 1/8 yard = 2⅞ yards
Labor rate standard: 7% (COLA) for six years
2007: $6.00 × 1.07 = $6.42
is 1 hour per muumuu
c. Material price variance = (AP × AQ) – (SP × AQ)
Material quantity variance = (SP × AQ) – (SP × SQ)
Labor rate variance = (AP × AQ) – (SP × AQ)
Labor efficiency variance = (SP × AQ) – (SP × SQ)
53. a. Actual OH cost [($48,165 + $140,220) ÷ 5,700] $ 33.05
b. Variable Overhead:
Actual
Budget
Applied
$8 × 6,000
$8 × 5,700
$48,165
$48,000
$45,600
$165 U
$2,400 U
VOH Spending Variance
VOH Efficiency Variance
Fixed Overhead:
Actual
Budget
Applied
$16 × 9,000
$16 × 5,700
$140,220
$144,000
$91,200
$3,780 F
$52,800 U
FOH Spending Variance
Volume Variance
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c. The $52,800 unfavorable volume variance exists because the company based its
standard fixed overhead rate on an expected capacity of 9,000 units (and, thus,
54. a. Total standard hours:
Tables (100 × 10)
1,000
Swings (400 × 3)
1,200
Benches (60 × 7)
420
2,620
Actual VOH
Budget VOH
Applied VOH
VOH Rate × AH
VOH Rate × SH
$12,800
$4 × 2,780 = $11,120
$4 × 2,620 = $10,480
$1,680 U
$640 U
VOH Spending Variance
VOH Efficiency Variance
$2,320 U
Total VOH Variance
36,000 DLHs per year ÷ 12 months = 3,000 DLHs per month
Actual FOH
Budget FOH
Applied FOH
$2 × 3,000
FOH Rate × SH
$5,900
$6,000
$2 × 2,620 = $5,240
$100 F
$760 U
FOH Spending Variance
Volume Variance
$660 U
Total FOH Variance
b. Variable Manufacturing Overhead Control
12,800
Fixed Overhead
5,900
Various accounts
18,700
To record actual OH costs for March
Work in Process Inventory
15,720
Variable Manufacturing Overhead Control
10,480
Fixed Manufacturing Overhead Control
5,240
To record applied OH costs for March
VOH Spending Variance
1,680
VOH Efficiency Variance
640
FOH Volume Variance
760
FOH Spending Variance
100
Variable Manufacturing Overhead Control
2,320
Fixed Manufacturing Overhead Control
660
To record OH variances for March