Chapter 6 – Performance Evaluation: Variance Analysis
6-11
Exercise 6-9
AQ × SP
SQ × SP
535,000 ft. × $0.23/ft.
(63,000 cables × 8.5 ft.) × $0.23/ft.
535,500 ft. × $0.23/ft.
$123,050
$123,165
$115 F
Direct materials quantity variance
Exercise 6-10
AQ × SP
SQ × SP
800 suits × 1.2 yds. × $5/yd.
1,025 yds. × $5/yd.
960 yds. × $5/yd.
$5,125
$4,800
$325 U
Direct materials quantity variance
Exercise 6-11
AQ × SP
SQ × SP
40,000 oz. × $0.20/oz.
# tests × 0.5 oz. × $0.20/oz.
$8,000
$500 U
Direct materials quantity variance
$8,000 – (# tests × $0.10) =
$500
$7,500 =
# tests × $0.10
$7,500
$0.10
=
# tests
75,000 =
# tests
6-12
Exercise 6-12
Purchasing from 12 vendors rather than a single vendor likely will result in
an unfavorable price variance. Sourcing from a single vendor probably
The implications for the quantity variance are not as clear. The three
Exercise 6-13
a.
AQ × AP
AQ × SP
6,000 lbs. purchased × $7.70/lb.
6,000 lbs. purchased × $8/lb.
$46,200
$48,000
$1,800 F
Direct materials price variance
AQ × SP
SQ × SP
5,040 lbs. used × $8/lb.
(2,800 boxes × 1.5 lbs.) × $8/lb.
4,200 lbs. × $8/lb.
$40,320
$33,600
$6,720 U
Direct materials quantity variance
Chapter 6 – Performance Evaluation: Variance Analysis
6-13
Exercise 6-13, continued
production run.
Exercise 6-14
AQ × AP
AQ × SP
50,300 DLH × $6.75/DLH
$352,100
$339,525
$12,575 U
Direct labor rate variance
Exercise 6-15
AQ × AP
AQ × SP
10,800 DLH × AP
10,800 DLH × $8.40/DLH
$88,000
$90,720
$2,720 F
Direct labor rate variance
Exercise 6-16
AQ × AP
AQ × SP
$33,400
AQ × $8/DLH
$1,400 U
Direct labor rate variance
$33,400 – (AQ × $8) =
$1,400
$32,000 =
AQ × $8
$32,000
$8
=
AQ
4,000 DLH =
AQ
Exercise 6-17
Chapter 6 – Performance Evaluation: Variance Analysis
6-15
Exercise 6-19
AQ × SP
SQ × SP
AQ × $6.50/DLH
(50,000 reams × .25 DLH/ream) × $6.50/DLH
12,500 DLH × $6.50/DLH
$81,250
$1,300 F
Direct labor efficiency variance
(AQ × $6.50) – $81,250 =
($1,300)
(AQ × $6.50) =
$79,950
AQ =
$79,950
$6.50
AQ =
12,300 DLH
6-16
Exercise 6-20
a.
AQ × AP
AQ × SP
SQ × SP
24,320 DLH × $15/DLH
24,320 DLH × $14/DLH
(6,400 cellos × 4 DLH) × $14/DLH
25,600 DLH × $14/DLH
$364,800
$340,480
$358,400
$24,320 U
$17,920 F
Direct labor rate variance
Direct labor efficiency variance
variance.
Exercise 6-21
AQ × AP
AQ × SP
SQ × SP
19,500 DLH × $3/DLH
(12,320 pkgs. × 1.5 DLH) × $3/DLH
18,480 DLH × $3/DLH
$50,000
$58,500
$55,440
$8,500 F
$3,060 U
Variable overhead
spending variance
Variable overhead
efficiency variance
Chapter 6 – Performance Evaluation: Variance Analysis
6-17
Exercise 6-22
Actual
Budget
$485,000
$500,000
$15,000 F
Fixed overhead spending variance
Exercise 6-23
Actual
Budget
$834,000
$840,000
$6,000 F
Fixed overhead spending variance
Exercise 6-24
Actual
Budget
$70,000
50,000 boxes × $1.35/box
$67,500
$2,500 U
Fixed overhead spending variance
6-18
Exercise 6-25
a.
AQPurch × AP
AQPurch × SP
8,500 lbs. purchased × $?/lb.
8,500 lbs. purchased × $0.75/lb.
$5,100
$6,375
$1,275 F
Direct materials price variance
b.
AQused × SP
SQ × SP
6,300 lbs. used × $0.75/lb.
(2,050 tests × 3 lbs.) × $0.75/lb.
6,150 lbs. used × $0.75/lb.
$4,725.00
$4,612.50
$112.50 U
Direct materials quantity variance
c.
AQ × AP
AQ × SP
850 DLH × $12/DLH
$9,775
$10,200
$425 F
Direct labor rate variance
d.
AQ × SP
SQ × SP
(2,050 tests × .4 DLH) × $12/DLH
850 DLH × $12/DLH
820 DLH × $12/DLH
$10,200
$9,840
$360 U
Direct labor efficiency variance
Chapter 6 – Performance Evaluation: Variance Analysis
6-19
Exercise 6-25, continued
e.
AQ × AP
AQ × SP
850 DLH × $9/DLH
$7,700
$7,650
$50 U
Variable overhead spending variance
f.
AQ × SP
SQ × SP
(2,050 tests × .4 DLH) × $9/DLH
850 DLH × $9/DLH
820 DLH × $9/DLH
$7,650
$7,380
$270 U
Variable overhead efficiency variance
g.
Actual
Budget
$13,750
2,100 tests × .4 DLH × $16/DLH
$13,440
$310 U
Fixed overhead spending variance
6-20
Exercise 6-25, continued
h.
TO: Andrew Nichols
FROM: John Student
DATE: April 5, 20XX
RE: Variance investigations for March
for the tests. I recommend that you investigate the reason we were able to
acquire our materials at a price that was lower than the standard price. If
The direct labor price variance for March was favorable, indicating we paid
workers or because of lower quality materials used for the tests.