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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
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:
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:
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
(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
(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
(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
(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
(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
