415
E13–24
Time variance:
Direct Labor Time Variance = (Actual Direct Labor Hours – Standard Direct
Labor Hours) × Standard Rate per Hour
= (1,100 hrs. – 1,050 hrs.*) × $19.00 per hour
= $950 Unfavorable Variance
*3 hrs. × 350 units
Also computed as:
Actual total direct labor cost (1,100 hrs. × $18.50) ……………. $20,350
Less standard total direct labor cost (1,050 hrs. × $19.00) … (19,950)
Total direct labor unfavorable cost variance …………………. $ 400
416
E13–25
Step 1: Determine the standard direct materials and direct labor per unit.
Standard direct materials quantity per unit:
Step 2: Using the standard quantity and time rates from Step 1, determine the
standard costs for the actual August production.
Step 3: Determine the direct materials quantity and direct labor time variances,
assuming no direct materials price or direct labor rate variances.
Actual direct materials used in production …………………………………. $ 13,320
Standard direct materials (Step 2) ……………………………………………… (12,250)
Direct materials quantity variance—unfavorable ………………………… $ 1,070*
*(33,300 lbs. – 30,625 lbs.) × $0.40 per lb. = $1,070 U
$13,320 ÷ $0.40 per lb. = 33,300 lbs.
$12,250 ÷ $0.40 per lb. = 30,625 lbs. or 24,500 books × 1.25 lbs. per book =
30,625 lbs.
E13–25, Concluded
Step 4: Determine the total variance, assuming no direct materials price or direct
labor rate variances.
E13–26
a. Actual weekly expenditure: 2 people × $21 per hr. × 36 hrs. per week = $1,512
b. Standard time used for the volume of admissions:
Unscheduled Scheduled Total
c. Actual minutes used (2 employees × 36 hrs. × 60 min.) ………. 4,320
Less standard minutes expected at actual volume ……………… (4,800)
Favorable time difference from standard ……………………………. (480)
Standard rate per minute …………………………………………………… × $0.35*
Direct labor time (efficiency) variance—favorable ………………. $ (168)
or
[(2 × 36 hours) – 80 hours] × $21 per hour = $(168)
418
P13–1
1.
A
B C D
1 ROYAL BRITISH FURNITURE COMPANY
2 Sales Bud
g
et
3 For the Month Endin
g
March 31
Unit Sales Unit Sellin
g
4 Product and Area
V
olume Price Total Sales
5 William:
6 Eastern Domestic 7,500 $800 $ 6,000,000
7 Western Domestic 6,000 700 4,200,000
2.
A
B C
1 ROYAL BRITISH FURNITURE COMPANY
2 Production Bud
g
et
3 For the Month Ending March 31
4 Units
5 William Kate
6 Expected units to be sold 16,000 12,000
(
)
(
)
419
P13–1, Continued
3.
A
B C D E F
1 ROYAL BRITISH FURNITURE COMPANY
2 Direct Materials Purchases Bud
g
et
3 For the Month Endin
g
March 31
4 Direct Materials
5
Fabric
(
sq.
y
ds.
)
Wood
(
lineal ft.
)
Filler
(
cu. ft.
)
Springs
(
units
)
Total
6 Required units for
production:
7 William 66,0001 264,0002 62,7003 231,0004
(
)
(
)
(
)
(
)
13 Unit price × $9.00 × $5.00 × $1.50 × $2.00
14
Total direct materials to
be purchased
$909,000
$2,107,500
$156,330
$722,000
$3,894,830
15
16 116,500 × 4.0
y
ds. = 66,000 sq.
y
ds.
17 216,500 × 16 lineal ft. = 264,000 lineal ft.
18 316,500 × 3.8 cu. ft. = 62,700 cu. ft.
19 416,500 × 14 units = 231,000 units
420
P13–1, Concluded
4.
A
B C D E
1 ROYAL BRITISH FURNITURE COMPANY
2 Direct Labor Cost Bud
g
et
3 For the Month Endin
g
March 31
4 Framing
Department
Cutting
Department
Upholstery
Department
Total
5 Hours required for production:
6 William* 41,250 16,500 49,500
421
P13–2
1.
A
B C D
1 JUPITER HELMETS INC.
2 Sales Bud
g
et
3 For the Month Endin
g
Ma
y
31
4 Unit Sales Unit Sellin
g
V
olume Price Total Sales
5 Bic
y
cle helmet 7,500 $ 24 $ 180,000
2.
A
B C
1 JUPITER HELMETS INC.
2 Production Bud
g
et
3 For the Month Endin
g
Ma
y
31
4 Units
5
Bicycle
Helmet
Motorcycle
Helmet
6 Expected units to be sold 7,500 5,000
y
(
)
(
)
422
P13–2, Continued
3.
A
B C D
1 JUPITER HELMETS INC.
2 Direct Materials Purchases Bud
g
et
3 For the Month Endin
g
Ma
y
31
Direct Materials
4 Plastic Foam Linin
g
Total
5 Units required for production:
6 Bic
y
cle helmet 6,9301 1,5402
7 Motorc
y
cle helmet 18,2003 7,2804
8 Plus desired units of inventory,
Ma
y
31 2,000 800
y
423
P13–2, Continued
4.
A
B C D
1 JUPITER HELMETS INC.
2 Direct Labor Cost Bud
g
et
3 For the Month Endin
g
Ma
y
31
4 Molding
Department
Assembly
Department
Total
5 Hours required for production:
6 Bic
y
cle helmet 2,3101 7702
7 Motorc
y
cle helmet 2,6003 2,0804
r
r
r
r
5.
A
B C
1 JUPITER HELMETS INC.
2 Factor
y
Overhead Cost Bud
g
et
3 For the Month Endin
g
Ma
y
31
4 Indirect factor
y
wa
g
es $125,000
5 Depreciation of plant and equipment 45,000
P13–2, Continued
6.
A
B C D
1 JUPITER HELMETS INC.
2 Cost of Goods Sold Bud
g
et
3 For the Month Endin
g
Ma
y
31
y
y
y
Ma
y
31
(
9,520
)
11 Cost of direct materials placed in
production $118,510
12 Direct labo
r
113,550
13 Factor
y
overhead 204,000
y
(
)
y
(
)
22 1Bic
y
cle helmet
(
200 × $15.00
)
$ 3,000
23 Motorc
y
cle helmet
(
100 × $90.00
)
9,000
24 Finished goods inventory, May 1 $ 12,000
25 2Plastic
(
1,480 × $4.40
)
$ 6,512
)
y
(
)
)
y
y
(
)
y
(
)
y
425
P13–2, Concluded
7.
A
B C
1 JUPITER HELMETS INC.
2 Sellin
g
and Administrative Expenses Bud
g
et
3 For the Month Endin
g
Ma
y
31
4 Selling expenses:
5 Sales salaries expense $175,000
6 Advertisin
g
expense 120,000
7 Travel expense—selling 50,000
8 Miscellaneous—selling 5,000
8.
A
B C
1 JUPITER HELMETS INC.
2 Bud
g
eted Income Statement
3 For the Month Endin
g
Ma
y
31
4 Revenue from sales $1,055,000
5 Cost of
g
oods sold
(
412,460
)
6 Gross profit $ 642,540
7 Selling and administrative expenses:
8 Selling expenses $350,000
9 Administrative expenses 105,000
10 Total Sellin
g
and administrative expenses
(
455,000
)
(
)
(
)
426
P13–3
1.
A
B C D
1 SHOE MART INC.
2 Cash Bud
g
et
3 For the Three Months Endin
g
March 31
4 Januar
y
Februar
y
March
5 Estimated cash receipts from:
6 Cash sales $ 90,000 $ 110,000 $ 140,000
7 Collections of accounts receivablea 230,000 330,000 420,000
8 Dividends 20,000 _ ______
9 Total cash receipts $ 340,000 $ 440,000 $ 560,000
10 Estimated cash pa
y
ments for:
(
(Continued)
427
P13–3, Concluded
24 Computations:
25 aCollections of accounts receivable: Januar
y
Februar
y
March
26 Novembe
r
sales $ 50,0001
y
32 2$240,000 × 75% = $180,000
33 3$240,000 × 25% = $60,000
34 4$450,000 × 80% × 75% = $270,000
35 5$450,000 × 80% × 25% = $90,000
36 6$550,000 × 80% × 75% = $330,000
37 bPa
y
ments for manufacturin
g
costs: Januar
y
Februar
y
March
38 Payment of accounts payable, beginning
of month balancec $ 18,000 $ 22,000 $ 29,000
39 Pa
y
ment of current month’s costd 198,000 261,000 342,000
40 Total $216,000 $283,000 $371,000
y
(
–
)
(
–
)
(
–
)
(
–
)
46
(
$420,000
–
$40,000
)
× 90% = $342,000
2. The budget indicates that the minimum cash balance will not be maintained in
March. This is due to the capital expenditures and note repayment requiring
significant cash outflows during the month. This situation can be corrected
428
P13–4
a. Standard
$4.60
b. Direct Materials Cost Variance
Price variance:
Direct Materials Price Variance = (Actual Price – Standard Price) × Actual Quantity
= ($1.40 per lb. – $1.25 per lb.) × 10,200 lbs.
= $1,530 Unfavorable Variance
Total direct materials cost variance:
Direct Materials Cost Variance = Direct Materials Price Variance + Direct
Materials Quantity Variance
= $1,530 + $750
= $2,280 Unfavorable Variance
Also computed as: