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Solutions Manual, Chapter 11 31
Problem 11-13 (45 minutes)
1. a.
Actual Quantity of Input,
at Actual Price
(AQ × AP)
Actual Quantity of
Input,
at Standard Price
(AQ × SP)
Standard Quantity
Allowed
for Actual Output,
at Standard Price
(SQ × SP)
21,600 feet** ×
$3.30 per foot
= $71,280
21,600 feet** ×
$3.00 per foot
= $64,800
21,600 feet* ×
$3.00 per foot
= $64,800
Materials price variance =
$6,480 U
Materials quantity
variance = $0
Spending variance = $6,480 U
*
12,000 units × 1.80 feet per unit = 21,600 feet
**
12,000 units × 1.80 feet per unit = 21,600 feet
Alternatively, the variances can be computed using the formulas:
32 Managerial Accounting for Managers, 4th Edition
Problem 11-13 (continued)
1. b.
Actual Hours of Input,
at Actual Rate
(AH × AR)
Actual Hours of Input,
at Standard Rate
(AH × SR)
Standard Hours Allowed
for Actual Output,
at Standard Rate
(SH × SR)
11,040 hours** ×
$17.50 per hour
= $193,200
11,040 hours** ×
$18.00 per hour
= $198,720
10,800 hours* ×
$18.00 per hour
= $194,400
Labor rate variance
= $5,520 F
Labor efficiency
variance
= $4,320 U
Spending variance = $1,200 F
*
12,000 units × 0.90 hours per unit = 10,800 hours
**
12,000 units × 0.92 hours per unit = 11,040 hours
Alternatively, the variances can be computed using the formulas:
Solutions Manual, Chapter 11 33
Problem 11-13 (continued)
1. c.
Actual Hours of Input,
at Actual Rate
(AH × AR)
Actual Hours of Input,
at Standard Rate
(AH × SR)
Standard Hours Allowed
for Actual Output,
at Standard Rate
(SH × SR)
11,040 hours** ×
$4.50 per hour
= $49,680
11,040 hours** ×
$5.00 per hour
= $55,200
10,800 hours* ×
$5.00 per hour
= $54,000
Variable overhead rate
variance = $5,520 F
Variable overhead
efficiency variance
= $1,200 U
Spending variance = $4,320 F
*
12,000 units × 0.90 hours per unit = 10,800 hours
**
12,000 units × 0.92 hours per unit = 11,040 hours
Alternatively, the variances can be computed using the formulas:
2.
Materials:
Price variance ($6,480 ÷ 12,000 units) ...........
$0.54 U
Quantity variance ($0 ÷ 12,000 units) ............
0.00
$0.54 U
Labor:
Rate variance ($5,520 ÷ 12,000 units) ...........
0.46 F
Efficiency variance ($4,320 ÷ 12,000 units) ....
0.36 U
0.10 F
Variable overhead:
Rate variance ($5,520 ÷ 12,000 units) ...........
0.46 F
Efficiency variance ($1,200 ÷ 12,000 units) ....
0.10 U
0.36 F
Excess of actual over standard cost per unit ........
$0.08 U
34 Managerial Accounting for Managers, 4th Edition
Problem 11-13 (continued)
3. Both the labor efficiency and variable overhead efficiency variances are
affected by inefficient use of labor time.
Excess of actual over standard cost per unit .......
$0.08 U
Less portion attributable to labor inefficiency:
Labor efficiency variance ...................................
0.36 U
Variable overhead efficiency variance .................
0.10 U
0.46 U
Portion due to other variances ...........................
$0.38 F
In sum, had it not been for the apparent inefficient use of labor time,
4. Although the excess of actual cost over standard cost is only $0.08 per
unit, the details of the variances are significant. The materials price
improvement opportunities that would improve efficiency.
Solutions Manual, Chapter 11 35
Problem 11-14 (45 minutes)
1. a. In the solution below, the materials price variance is computed on the
entire amount of materials purchased whereas the materials quantity
variance is computed only on the amount of materials used in
production:
Actual Quantity of
Input, at
Actual Price
Actual Quantity
of Input, at
Standard Price
Standard Quantity
Allowed for Output, at
Standard Price
(AQ × AP)
(AQ × SP)
(SQ × SP)
12,000 ounces ×
$20.00 per ounce
9,375 ounces* ×
$20.00 per ounce
$225,000
= $240,000
= $187,500
Price Variance,
$15,000 F
9,500 ounces × $20.00 per ounce
= $190,000
Quantity Variance,
$2,500 U
*3,750 units × 2.5 ounces per unit = 9,375 ounces
Alternatively, the variances can be computed using the formulas:
materials quantity variance for the month.
36 Managerial Accounting for Managers, 4th Edition
Problem 11-14 (continued)
2. a.
Actual Hours of
Input, at the
Actual Rate
Actual Hours of
Input, at the
Standard Rate
Standard Hours
Allowed for Output, at
the Standard Rate
(AH × AR)
(AH × SR)
(SH × SR)
5,600 hours* ×
$12.00 per hour
5,600 hours ×
$12.50 per hour
5,250 hours** ×
$12.50 per hour
= $67,200
= $70,000
= $65,625
Rate Variance,
$2,800 F
Efficiency Variance,
$4,375 U
Spending Variance,
$1,575 U
*
35 technicians × 160 hours per technician = 5,600 hours
**
3,750 units × 1.4 hours per technician = 5,250 hrs
Alternatively, the variances can be computed using the formulas:
Labor rate variance = AH (AR – SR)
b. No, the new labor mix probably should not be continued. Although it
the month. Thus, the new labor mix increases overall labor costs.
Solutions Manual, Chapter 11 37
Problem 11-14 (continued)
3.
Actual Hours of
Input, at the
Actual Rate
Actual Hours of
Input, at the
Standard Rate
Standard Hours
Allowed for Output,
at the Standard Rate
(AH × AR)
(AH × SR)
(SH × SR)
5,600 hours* ×
$3.50 per hour
5,250 hours** ×
$3.50 per hour
$18,200
= $19,600
= $18,375
Rate Variance,
$1,400 F
Efficiency Variance,
$1,225 U
Spending Variance,
$175 F
* Based on direct labor hours:
35 technicians × 160 hours per technician = 5,600 hours
** 3,750 units × 1.4 hours per unit = 5,250 hours
Alternatively, the variances can be computed using the formulas:
38 Managerial Accounting for Managers, 4th Edition
Problem 11-15 (45 minutes)
1. a.
Actual Quantity of
Input, at Actual Price
Actual Quantity
of Input, at
Standard Price
Standard Quantity
Allowed for Output,
at Standard Price
(AQ × AP)
(AQ × SP)
(SQ × SP)
60,000 pounds ×
$1.95 per pound
60,000 pounds ×
$2.00 per pound
45,000 pounds* ×
$2.00 per pound
= $117,000
= $120,000
= $90,000
Price Variance,
$3,000 F
49,200 pounds × $2.00 per pound = $98,400
Quantity Variance,
$8,400 U
*15,000 pools × 3.0 pounds per pool = 45,000 pounds
Alternatively, the variances can be computed using the formulas:
Solutions Manual, Chapter 11 39
Problem 11-15 (continued)
b.
Actual Hours of
Input, at the
Actual Rate
Actual Hours of Input,
at the Standard Rate
Standard Hours
Allowed for Output,
at the Standard Rate
(AH × AR)
(AH × SR)
(SH × SR)
11,800 hours ×
$7.00 per hour
11,800 hours ×
$6.00 per hour
12,000 hours* ×
$6.00 per hour
= $82,600
= $70,800
= $72,000
Rate Variance,
$11,800 U
Efficiency Variance,
$1,200 F
Spending Variance,
$10,600 U
*15,000 pools × 0.8 hours per pool = 12,000 hours
Alternatively, the variances can be computed using the formulas:
40 Managerial Accounting for Managers, 4th Edition
Problem 11-15 (continued)
c.
Actual Hours of
Input, at the
Actual Rate
Actual Hours of
Input, at the
Standard Rate
Standard Hours
Allowed for Output,
at the Standard Rate
(AH × AR)
(AH × SR)
(SH × SR)
5,900 hours ×
$3.00 per hour
6,000 hours* ×
$3.00 per hour
$18,290
= $17,700
= $18,000
Rate Variance,
$590 U
Efficiency Variance,
$300 F
Spending Variance,
$290 U
*15,000 pools × 0.4 hours per pool = 6,000 hours
Alternatively, the variances can be computed using the formulas:
