SOLUTIONS TO EXERCISES
EXERCISE 11-1
(a) Direct materials: (2,000 X 3) X $5 = $30,000
(b) Direct materials: 3 X $5 = $15.00
Direct labor: 1/2 X $15 = 7.50
prudently used are:
1. Management planning is facilitated.
conscious.
3. Setting selling prices is facilitated.
of cost control.
5. Variances are highlighted in management by exception.
EXERCISE 11-2
Ingredient
Amount
Per
Gallon
Standard
Waste
Standard
Usage
Standard
Price
Standard
Cost Per
Gallon
Grape concentrate
Sugar (54 ÷ 50)
Lemons (60 ÷ 50)
Yeast
Nutrient
Water (2,600 ÷ 50)
60* oz.
1.08 lb.
1.2
1 tablet
1 tablet
52 oz.
4%
10%
25%
0%
0%
0%
(a)
(b)
(c)
62.5 oz.
1.20 lb.
1.6
1 tablet
1 tablet
52 oz.
$.06
.30
.60
.25
.20
.005
$3.75
.36
.96
.25
.20
.26
$5.78
*3,000 ÷ 50
(a) .96X = 60 ounces; or X = (60 ounces)/.96.
EXERCISE 11-3
Direct materials
Direct labor
Manufacturing overhead
2.3 hours X $7 16.10
EXERCISE 11-4
(a)
Actual service time
Setup and downtime
Cleanup and rest periods
Standard direct labor hours per oil change
1.0 hours
0.2 hours
0.3 hours
1.5 hours
(b)
Hourly wage rate
Payroll taxes ($12 X 10%)
Fringe benefits ($12 X 25%)
Standard direct labor hourly rate
$12.00
1.20
3.00
$16.20
(c)
Standard direct labor cost per oil change
=
=
1.50 hours X $16.20 per hour
$24.30
(d)
Direct labor quantity variance
=
=
=
(1.60 hours X $16.20) – (1.50 hours X $16.20)
$25.92 – $24.30
$1.62 U
EXERCISE 11-5
(a) Total materials variance:
( AQ X AP )
(29,000 X $4.70)
$136,300
–
–
( SQ X SP )
(28,500* X $5.00)
$142,500
=
$6,200 F
*9,500 X 3
Materials price variance:
( AQ X AP )
(29,000 X $4.70)
$136,300
–
–
( AQ X SP )
(29,000 X $5.00)
$145,000
=
$8,700 F
Materials quantity variance:
( AQ X SP )
(29,000 X $5.00)
$145,000
–
–
( SQ X SP )
(28,500 X $5.00)
$142,500
=
$2,500 U
(b) Total materials variance:
( AQ X AP )
(28,000 X $5.15)
$144,200
–
–
( SQ X SP )
(28,500 X $5.00)
$142,500
=
$1,700 U
Materials price variance:
( AQ X AP )
(28,000 X $5.15)
$144,200
–
–
( AQ X SP )
(28,000 X $5.00)
$140,000
=
$4,200 U
Materials quantity variance:
( AQ X SP )
(28,000 X $5.00)
$140,000
–
–
( SQ X SP )
(28,500 X $5.00)
$142,500
=
$2,500 F
EXERCISE 11-6
(a) Total labor variance:
( AH X AR )
(40,600 X $12.15)
$493,290
–
–
( SH X SR )
(40,000* X $12.00)
$480,000
=
$13,290 U
*10,000 X 4
(b) Labor price variance:
( AH X AR )
(40,600 X $12.15)
$493,290
–
–
( AH X SR )
(40,600 X $12.00)
$487,200
=
$6,090 U
Labor quantity variance:
( AH X SR )
(40,600 X $12.00)
$487,200
–
–
( SH X SR )
(40,000 X $12.00)
$480,000
=
$7,200 U
(c) Labor price variance:
( AH X AR )
(40,600 X $12.15)
$493,290
–
–
( AH X SR )
(40,600 X $12.25)
$497,350
=
$4,060 F
( AH X SR )
(40,600 X $12.25)
$497,350
–
–
( SH X SR )
(41,000* X $12.25)
$502,250
=
$4,900 F
*4.1 X 10,000
EXERCISE 11-7
Total materials variance:
( AQ X AP )
(1,900 X $2.65*)
$5,035
–
–
( SQ X SP )
(1,880** X $2.50)
$4,700
=
$335 U
Materials price variance:
( AQ X AP )
(1,900 X $2.65)
$5,035
–
–
( AQ X SP )
(1,900 X $2.50)
$4,750
=
$285 U
*$5,035 ÷ 1,900 **235 X 8
EXERCISE 11-7 (Continued)
Materials quantity variance:
( AQ X SP )
(1,900 X $2.50)
$4,750
–
–
( SQ X SP )
(1,880 X $2.50)
$4,700
=
$50 U
Total labor variance:
( AH X AR )
(700 X $11.80*)
$8,260
–
–
( SH X SR )
(705** X $12.00)
$8,460
=
$200 F
*$8,260 ÷ 700 **235 X 3
Labor price variance:
( AH X AR )
(700 X $11.80)
$8,260
–
–
( AH X SR )
(700 X $12.00)
$8,400
=
$140 F
Labor quantity variance:
( AH X SR )
(700 X $12.00)
$8,400
–
–
( SH X SR )
(705 X $12.00)
$8,460
=
$60 F
EXERCISE 11-7 (Continued)
(Not Required)
Materials Variance Matrix
(1)
(2)
(3)
Actual Quantity
X Actual Price
Actual Quantity
X Standard Price
Standard Quantity
X Standard Price
1,900 X $2.65 = $5,035
1,900 X $2.50 = $4,750
1,880 X $2.50 = $4,700
Price Variance
(1) – (2)
$5,035 – $4,750 = $285 U
Quantity Variance
(2) – (3)
$4,750 – $4,700 = $50 U
Total Variance
(1) – (3)
$5,035 – $4,700 = $335 U
Labor Variance Matrix
(1)
(2)
(3)
Actual Hours
X Actual Rate
Actual Hours
X Standard Rate
Standard Hours
X Standard Rate
700 X $11.80 = $8,260
700 X $12.00 = $8,400
705 X $12.00 = $8,460
Price Variance
(1) – (2)
$8,260 – $8,400 = $140 F
Quantity Variance
(2) – (3)
$8,400 – $8,460 = $60 F
Total Variance
(1) – (3)
$8,260 – $8,460 = $200 F
EXERCISE 11-8
(a) Total materials variance:
( AQ X AP )
(1,220 X $128)
$156,160
–
–
( SQ X SP )
(1,200 X $130)
$156,000
=
$160 U
Materials price variance:
( AQ X AP )
(1,220 X $128)
$156,160
–
–
( AQ X SP )
(1,220 X $130)
$158,600
=
$2,440 F
Materials quantity variance:
( AQ X SP )
(1,220 X $130)
$158,600
–
–
( SQ X SP )
(1,200 X $130)
$156,000
=
$2,600 U
Total labor variance:
( AH X AR )
(4,150 X $13)
$53,950
–
–
( SH X SR )
(4,300 X $12.50)
$53,750
=
$200 U
Labor price variance:
( AH X AR )
(4,150 X $13)
$53,950
–
–
( AH X SR )
(4,150 X $12.50)
$51,875
=
$2,075 U
Labor quantity variance:
( AH X SR )
(4,150 X $12.50)
$51,875
–
–
( SH X SR )
(4,300 X $12.50)
$53,750
=
$1,875 F
by the purchasing department.
The unfavorable labor price variance may be caused by misallocation
of the work force by the production department. In this case, more
experienced workers may have been assigned to tasks normally done
by inexperienced workers. An unfavorable labor variance may also occur
EXERCISE 11-9
(a) Number of units = Total standard cost ÷ Standard cost per unit
(b) AQ = [(SQ X SP)
±
Quantity variance] ÷ SP
(c) AP = [(AQ X SP)
±
Price variance] ÷ AQ
(d) AH = [(SH X SR)
±
Quantity variance] ÷ SR
(e) AR = [(AH X SR)
±
Price variance] ÷ AH
EXERCISE 11-10
TOBY TOOL & DIE COMPANY
Direct Labor Variance Report
For the Month Ended March 31, 2014
Job
No.
Actual
Hours
Standard
Hours
Quantity
Variance
(a)
Actual
Rate
(1)
Standard
Rate
(2)
Price
Variance
(b)
Explanation
A257
A258
A259
A260
221
450
300
116
225
430
300
110
$ 80.00
400.00
( 0
120.00
F
U
U
$20.00
$21.00
$20.60
$18.00
$20.00
$20.00
$20.00
$20.00
$ 0
450.00
180.00
232.00
U
U
F
Repeat job
Rush job
Replacement
worker
New trainee
Totals
$ 440.00
U
$398.00
U
EXERCISE 11-11
Total overhead variance:
Actual Overhead
$263,000
–
–
Overhead Applied
$255,000
(51,000 X $5)
=
$8,000 U
EXERCISE 11-12
(a)
Overhead Budget
(at normal capacity)
÷
Direct Labor Hours
(at normal capacity)
=
Predetermined
Overhead Rate
Variable
$250,000
100,000
$2.50
Fixed
600,000
100,000
$6.00
(b)
Standard Hours
Allowed
X
Predetermined
Overhead Rate
=
Overhead
Applied
95,000
$8.50
$807,500
(c)
Actual Overhead
–
Overhead Applied
=
Total Overhead
Variance
$856,000
–
$807,500
=
$48,500 U
($256,000 + $600,000)
(95,000 X $8.50)
EXERCISE 11-13
(a)
(AQ X AP)
( $10,800)
–
–
( SQ X SP)
(2,140* X $5)
=
=
Total Materials Variance
$100 U
(AQ X AP)
( $10,800)
–
–
( AQ X SP)
(2,400 X $5)
=
=
Materials Price Variance
$1,200 F
( AQ X SP)
(2,400 X $5)
–
–
( SQ X SP)
(2,140* X $5)
=
=
Materials Quantity Variance
$1,300 U
*1,070 X 2
cause all three variances mentioned.
EXERCISE 11-14
(a)
PICARD LANDSCAPING
Variance Report – Purchasing Department
For the Current Month
Project
Actual
Pounds
Purchased
(1)
Actual
Price
(2)
Standard
Price
Price
Variance
(a)
Explanation
Remington
Chang
Wyco
500
400
550
$2.40
2.30
2.60
$2.50
2.50
2.50
$50 F
80 F
55 U
Purchased poor-quality seeds
Seeds on sale
Price increased
Total price variance
$75 F
(b)
PICARD LANDSCAPING
Variance Report – Production Department
For the Current Month
Project
Actual
Pounds
Standard
Pounds
Standard
Price
Quantity
Variance
(b)
Explanation
Remington
Chang
Wyco
500
400
550
460
410
480
$2.50
2.50
2.50
$100 U
25 F
175 U
Purchased poor-quality seeds
Purchased higher-quality seeds
New employee
Total quantity variance
$250 U