SOLUTIONS TO EXERCISES—SET C
PROBLEM 25-1C
(a) Total materials variance:
( AQ X AP )
(20,500 X $4.90)
$100,450
–
–
( SQ X SP )
(19,600* X $5.00)
$98,000
=
$2,450 U
$100,450
–
=
$2,050 F
Materials quantity variance:
( AQ X SP )
(20,500 X $5.00)
$102,500
–
–
( SQ X SP )
(19,600 X $5.00)
$98,000
=
$4,500 U
Total labor variance:
( AH X AR )
–
( SH X SR )
Labor price variance:
( AH X AR )
(19,600 X $12.20)
$239,120
–
–
( AH X SR )
(19,600 X $12.00)
$235,200
=
$3,920 U
Labor quantity variance:
( AH X SR )
$235,200
–
–
( SH X SR )
=
PROBLEM 25-2C
(a) (1) Total materials variance:
( AQ X AP )
(21,000 X $3.30)
$69,300
–
–
( SQ X SP )
(22,000 X $3.00)
$66,000
=
$3,300 U
( AQ X AP )
–
( AQ X SP )
–
( SQ X SP )
(2) Total labor variance:
( AH X AR )
(3,450 X $11.80)
$40,710
–
–
( SH X SR )
(3,600 X $12.50)
$45,000
=
$4,290 F
( AH X AR )
–
(3,450 X $12.50)
–
( SH X SR )
(b) Total overhead variance:
Actual
Overhead
$101,500
–
–
Overhead
Applied
$104,400
(3,600 X $29*)
=
$2,900 F
PROBLEM 25-2C (Continued)
(c) BORTON MANUFACTURING COMPANY
Income Statement
For the Month Ended July 31, 2017
Sales …………………………………………………………. $280,000
Cost of goods sold (at standard) …………………. 215,4001
Gross profit (at standard) …………………………... 64,600
Variances
Materials price …………………………………….. $ 6,300
PROBLEM 25-3C
(a) (1) Total materials variance:
( AQ X AP )
(76,000 X $7.20)
–
( SQ X SP )
(78,500* X $6.90)
Materials price variance:
( AQ X AP )
(76,000 X $7.20)
$547,200
–
–
( AQ X SP )
(76,000 X $6.90)
$524,400
=
$22,800 U
( AQ X SP )
(76,000 X $6.90)
$524,400
–
–
( SQ X SP )
(78,500 X $6.90)
=
$17,250 F
(2) Total labor variance
( AH X AR )
(14,900 X $11.20)
$166,880
–
–
( SH X SR )
(15,700 X $11.40)
$178,980
=
$12,100 F
–
( AH X SR )
( AH X SR )
(14,900 X $11.40)
–
(b) Total overhead variance:
Actual
Overhead
PROBLEM 25-3C (Continued)
(c) The only variance that is more than 5% from standard is:
Labor quantity variance. The actual hours of 14,900 is 5.1% under the
standard hours of 15,700.
PROBLEM 25-4C
(a) $10,000 ÷ 200,000 = $.05; $1.00 – $.05 = $.95 standard materials price
per pound. OR
200,000 X $1.00 = $200,000; $200,000 – $10,000 = $190,000; $190,000 ÷
200,000 = $.95.
(c) Standard hours allowed are 100,000 (50,000 X 2).
(d) $10,920 ÷ $12 = 910 hours over standard; 100,000 standard hours +
910 hours = 100,910 actual hours worked. OR
100,000 X $12 = $1,200,000; $1,200,000 + $10,920 = $1,210,920;
$1,210,920 ÷ $12 = 100,910 actual hours worked.
PROBLEM 25-5C
(a) Materials price variance:
( AQ X AP )
(2,540 X $2.05*)
$5,207
–
–
( AQ X SP )
(2,540 X $2.00)
$5,080
=
$127 U
(2,540 X $2.00)
(AH X AR)
(1,240 X $21.10*)
–
–
=
$1,364 U
–
(b) Total overhead variance:
–
=
Actual Overhead
$16,000
–
–
Overhead Applied
$15,000
PROBLEM 25-5C (Continued)
(c)
ALOE LABS
Income Statement
For the Month Ended May 31, 2017
Service revenue ……………………………………………… $58,000
Cost of service provided (at standard)
($18 X 2,500) ……………………………………………….. 45,000
Gross profit (at standard) ……………………………….. 13,000
Variances
Materials price ………………………………………… $ 127
(d) The unfavorable materials price variance could be caused by price
increases, using the wrong shipping method, or rising prices.
*PROBLEM 25-6C
(a) 1. Raw Materials Inventory (8,200 X $4.00) ……… 32,800
Accounts Payable (8,200 X $3.60) ………… 29,520
Materials Price Variance ……………………… 3,280
[8,200 X ($3.60 – $4.00)]
4. Work in Process Inventory …………………………. 49,500
(5,500 X $9.00)
Factory Labor …………………………………….. 46,800
Labor Quantity Variance ……………………… 2,700
[(5,500 – 5,200) X $9.00]
7. Finished Goods Inventory ………………………….. 165,000
(5,500 X $30.00)
Work in Process Inventory ………………….. 165,000
*PROBLEM 25-6C (Continued)
(b)
Raw Materials Inventory
Materials Price Variance
Work in Process Inventory
(1) 32,800
(2) 32,800
(1) 3,280
(2) 30,800
(4) 49,500
(6) 84,700
(7) 165,000
(c) Overhead Variance (1) …………………………..………………. 1,060
Manufacturing Overhead…………………………………. 1,060
(d) PLANTER MANUFACTURING COMPANY
Income Statement
For the Month Ended January 31, 2017
Sales revenue ………………………………………………… $280,000
Cost of goods sold (at standard) …………………….. 165,000
(5,500 X $30)
Gross profit (at standard) ……………………………….. 115,000
Variances
*PROBLEM 25-7C
Overhead controllable variance:
Actual
Overhead
Overhead volume variance:
*PROBLEM 25-8C
Overhead controllable variance:
Actual
Overhead
$101,500
–
–
Overhead
Budgeted
$102,600
=
$1,100 F
PROBLEM 25-9C
Overhead controllable variance:
Actual
Overhead
*PROBLEM 25-10C
Overhead controllable variance:
Actual Overhead
$16,000
–
–
Overhead Budgeted
$16,000