PROBLEM 11-3A (Continued)
5.7% ($.25 ÷ $4.40). The same result can be obtained by dividing the
total price variance by the total standard price for the quantities purchased
($22,625 ÷ $398,200).
The labor price variance is 5.2% from standard ($.70 ÷ $13.40). The
The labor quantity variance is 5.7% (760 ÷ 13,440) from standard. The
PROBLEM 11-4A
(a) $3,510 ÷ 117,000 = $.03; $.92 + $.03 = $.95 standard materials price per
pound. OR
(b) $4,750 ÷ $.95 = 5,000 pounds; 117,000 – 5,000 = 112,000 standard
quantity for 28,000 units or 4.0 pounds (112,000 ÷ 28,000) per unit. OR
(d) $7,200 ÷ $12.00 = 600 hours over standard; 44,800 standard hours +
600 hours = 45,400 actual hours worked. OR
(e) $9,080 ÷ 45,400 = $.20; $12.00 – $.20 = $11.80 actual rate per hour. OR
(g) Direct materials 4.0 pounds X $.95 = $3.80; direct labor 1.6 X $12.00 =
(h) 44,800 X $7.20 = $322,560 overhead applied.
PROBLEM 11-5A
(a) Materials price variance:
( AQ X AP )
(3,050 X $1.38*)
$4,209
–
–
( AQ X SP )
(3,050 X $1.46)
$4,453
=
$244 F
*$4,209 ÷ 3,050
Materials quantity variance:
( AQ X SP )
(3,050 X $1.46)
$4,453
–
–
( SQ X SP )
(3,000* X $1.46)
$4,380
=
$73 U
*1,500 X 2
Labor price variance:
( AH X AR)
(1,600 X $23*)
$36,800
–
–
( AH X SR)
(1,600 X $24)
$38,400
=
$1,600 F
*$36,800 ÷ 1,600
Labor quantity variance:
–
–
(SH X SR )
(1,500* X $24)
$36,000
=
$2,400 U
*1,500 X 1 hr.
(b) Total Overhead variance:
Actual
Overhead
$22,400
($7,400 + $15,000)
–
–
Overhead
Applied
$24,000
(1,500 X $16*)
=
$1,600 F
*$10 + $6
PROBLEM 11-5A (Continued)
(c)
PACE LABS, INC.
Income Statement
For the Month Ended November 30, 2014
Service revenue …………………………………………….. $75,000
Cost of service provided (at standard)
(1,500 X $42.92) ………………………………………….. 64,380
Gross profit (at standard) ……………………………….. 10,620
Variances
The unfavorable labor quantity variance could be caused by inexperienced
workers, poor quality materials, or faulty test procedures.
*PROBLEM 11-6A
(a) 1. Raw Materials Inventory (6,200 X $1.00) ………… 6,200
Materials Price Variance
2. Work in Process Inventory (5,700* X $1) ……….. 5,700
Materials Quantity Variance
*1,900 X 3
3. Factory Labor (2,000 X $8) …………………………... 16,000
Labor Price Variance
4. Work in Process Inventory
(1,900 X $8.00) …………………………………………. 15,200
5. Manufacturing Overhead ……………………………… 25,000
6. Work in Process Inventory
7. Finished Goods Inventory
8. Accounts Receivable …………………………..………. 65,000
*PROBLEM 11-6A (Continued)
(b)
Raw Materials Inventory
Materials Price Variance
Work in Process Inventory
(1) 6,200
(2) 6,200
(1) 310
(2) 5,700
(4) 15,200
(6) 23,750
(7) 44,650
Factory Labor
Materials Quantity Variance
Finished Goods Inventory
(3) 16,000
(4) 16,000
(2) 500
(7) 44,650
(8) 44,650
Manufacturing Overhead
Labor Price Variance
Cost of Goods Sold
(5) 25,000
(6) 23,750
(3) 400
(8) 44,650
Labor Quantity Variance
(4) 800
(c) Overhead Variance ($25,000 – $23,750)……………. 1,250
Manufacturing Overhead …………………………. 1,250
(d) JORGENSEN CORPORATION
Income Statement
For the Month Ended January 31, 2014
Sales revenue ………………………………………………… $65,000
Cost of goods sold (at standard)
(1,900 X $23.50) ………………………………………….. 44,650
Gross profit (at standard) ……………………………….. 20,350
Variances
*PROBLEM 11-7A
Overhead controllable variance:
Actual
Overhead
$80,700
–
–
Overhead
Budgeted
$78,800
[(7,840* X $7.50) + $20,000]
=
$1,900 U
*(4,900 X 1.6 hours)
Overhead volume variance:
Fixed
Overhead
Rate
$2.50/hr.
X
X
Normal
Capacity
Hours
(8,000
–
–
Standard
Hours
Allowed
7,840)
=
$400 U
*PROBLEM 11-8A
Overhead controllable variance:
Actual
Overhead
$189,500
–
–
Overhead
Budgeted
$190,250
[(45,000* X $3.00) +
(42,500 X $1.30)]
=
$750 F
*(15,000 X 3 hours)
Overhead volume variance:
Fixed
Overhead
Rate
$1.30/hr.
X
X
Normal
Capacity
Hours
(42,500
–
–
Standard
Hours
Allowed
45,000)
=
$3,250 F
*PROBLEM 11-9A
Overhead controllable variance:
Actual
Overhead
$86,000
($49,000 + $37,000)
–
–
Overhead
Budgeted
$83,944
[(13,440* X $2.60) + $49,000]
=
$2,056 U
*(11,200 X 1.2 hours)
Overhead volume variance:
Fixed
Overhead
Rate
$3.50/hr.
X
X
Normal
Capacity
Hours
(14,000
–
–
Standard
Hours
Allowed
13,440)
=
$1,960 U
*PROBLEM 11-10A
Overhead controllable variance:
Actual
Overhead
$22,400
($7,400 + $15,000)
–
–
Overhead
Budgeted
$23,000
[(1,500 X $6) + $14,000]
=
$600 F
Overhead volume variance:
Fixed
Overhead
Rate
$10
X
X
Normal
Capacity
Hours
(1,400*
–
–
Standard
Hours
Allowed
1,500)
=
$1,000 F
*$14,000 ÷ $10