Handout - Standard Cost Variances II

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Pennsylvania State University *

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Accounting

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Apr 3, 2024

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Chp 10 – Standard Costing Variances II 1. A company started and completed 42,000 computers during the period. Records show that the company actually used 1,000,000 total components costing $4,250,000. The standard cost analysis shows that the shop was expected to use 1,050,000 components at $4 each. Calculate the direct materials price and quantity variances. Indicate if the variances are favorable or not. Write the entry to record the variances. 2. A company determined that it should take 1.5 direct labor hours at $11 per hour to produce 1.0 units of finished goods. During the period, the company actually produced 2,700 units, using 3,780 labor hours and $45,360 to do so. Calculate the direct labor rate and labor efficiency variances. Indicate if the variances are favorable or not. Write the entry to record the variances. 3. A company completed 42,000 sofas during the period. It incurred 250,000 direct labor hours at a cost of $7.75 per hour. The standard costs for these units were 252,000 hours at $8.00 per hour. Calculate the direct labor rate and labor efficiency variances. Indicate if the variances are favorable or not. Write the entry to record the variances. 4. A company made 1,000 loveseats using 4,010 cushions at a cost of $165,412. According to studies of sofa production, the company should have been able to produce 1,000 loveseats using 4 cushions per loveseat at a cost of $40 per cushion. Calculate the materials price and quantity variances. Indicate if the variances are favorable or not. Write the entry to record the variances. 5. A company manufacturers garage doors. Each door requires two fiberglass panels. The standard cost of each panel is $150. This month the company started and completed 2,040 garage doors. Records show that the company purchased 4,200 fiberglass panels costing $623,700. All 4,200 panels were used in production. Calculate the materials price and quantity variances. Indicate if the variances are favorable or not. Write the entry to record the variances. 6. A production manager was told to make 15 dog houses and not to exceed 5.0 direct labor hours per dog house or $12 per direct labor hour. The manager actually used 74 direct labor hours costing $910. Calculate the labor rate and efficiency variances. Indicate if the variances are favorable or not. Write the entry to record the variances. 7. A company makes replacement windows. It established a standard time of 4 hours per window from start to finish. The standard labor rate is $18 per hour. The company made 420 windows and worked 1,690 at a cost of $30,000. Calculate the labor rate and efficiency variances. Indicate if the variances are favorable or not. Write the entry to record the variances.

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