1- B.3.B. Red Rose is a disease testing lab. Shown below are the standard costs for a typical test.Direct materials (2 test tubes @ $1.50 per tube)$ 3Direct labor (1 hour @ $20 per hour)$ 20Variable overhead (1 hour @ $6 per hour)$ 6Fixed overhead (1 hour @ $12 per hour)$ 12Total standard cost per test$ 41The lab does not maintain an inventory of test tubes. Therefore, the tubes purchased eachmonth are used that month. Actual activity for the month of January 2021, when 2,500 testswere conducted, resulted in the following.Direct materials (5,200 test tubes @ $1.60 per tube)$ 8,320Direct labor (2,400 hours @ $21 per hour)$ 50,400Variable overhead$ 14,800Fixed overhead$ 31,000Monthly budgeted fixed overhead is $ 24,000.(a) Compute the total, price and quantity variances for direct materials and direct labor andthe total, controllable and volume variances for overhead. Show the calculations.(b) Make the closing entry for all variance accounts.

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Description: 1- B.3.B. Red Rose is a disease testing lab. Shown below are the standard costs for a typical test.Direct materials (2 test tubes @ $1.50 per tube)$ 3Direct labor (1 hour @ $20 per hour)$ 20Variable overhead (1 hour @ $6 per hour)$ 6Fixed overhead (

With the help of the following formulas, we can find total, price, and quantity variances: Material…

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1- B.3.B. Red Rose is a disease testing lab. Shown below are the standard costs for a typical test. Direct materials (2 test tubes @ $1.50 per tube) $ 3 Direct labor (1 hour @ $20 per hour) $ 20 Variable overhead (1 hour @ $6 per hour) $ 6 Fixed overhead (1 hour @ $12 per hour) $ 12 Total standard cost per test $ 41 The lab does not maintain an inventory of test tubes. Therefore, the tubes purchased each month are used that month. Actual activity for the month of January 2021, when 2,500 tests

1- B.3.B. Red Rose is a disease testing lab. Shown below are the standard costs for a typical test. Direct materials (2 test tubes @ $1.50 per tube) $ 3 Direct labor (1 hour @ $20 per hour) $ 20 Variable overhead (1 hour @ $6 per hour) $ 6 Fixed overhead (1 hour @ $12 per hour) $ 12 Total standard cost per test $ 41 The lab does not maintain an inventory of test tubes. Therefore, the tubes purchased each month are used that month. Actual activity for the month of January 2021, when 2,500 tests

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter5: Activity-based Costing And Management

Section: Chapter Questions

Problem 44E: Use the following information for Exercises 5-44 through 5-46: The following six situations at...

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Use the following information for Exercises 5-44 through 5-46: The following six situations at Diviney Manufacturing Inc. are independent. a. A manual insertion process takes 30 minutes and 8 pounds of material to produce a product. Automating the insertion process requires 15 minutes of machine time and 7.5 pounds of material. The cost per labor hour is 12, the cost per machine hour is 8, and the cost per pound of materials is 10. b. With its original design, a gear requires 8 hours of setup time. By redesigning the gear so that the number of different grooves needed is reduced by 50%, the setup time is reduced by 75%. The cost per setup hour is 50. c. A product currently requires 6 moves. By redesigning the manufacturing layout, the number of moves can be reduced from 6 to 0. The cost per move is 20. d. Inspection time for a plant is 16,000 hours per year. The cost of inspection consists of salaries of 8 inspectors, totaling 320,000. Inspection also uses supplies costing 5 per inspection hour. The company eliminated most defective components by eliminating low-quality suppliers. The number of production errors was reduced dramatically by installing a system of statistical process control. Further quality improvements were realized by redesigning the products, making them easier to manufacture. The net effect was to achieve a close to zero-defect state and eliminate the need for any inspection activity. e. Each unit of a product requires 6 components. The average number of components is 6.5 due to component failure, requiring rework and extra components. Developing relations with the right suppliers and increasing the quality of the purchased component can reduce the average number of components to 6 components per unit. The cost per component is 500. f. A plant produces 100 different electronic products. Each product requires an average of 8 components that are purchased externally. The components are different for each part. By redesigning the products, it is possible to produce the 100 products so that they all have 4 components in common. This will reduce the demand for purchasing, receiving, and paying bills. Estimated savings from the reduced demand are 900,000 per year. 5-44 Nonvalue-Added Costs Refer to the information for Diviney Manufacturing on the previous page. Required: Estimate the nonvalue-added cost for each situation.
Carson Construction Consultants performs cement core tests in its Greenville laboratory. The following standard costs for the tests have been developed by the company’s controller, Landon Carson, based on performing 2,100 core tests per month. Standard Price Standard Quantity Standard Cost Direct materials $0.5 per pound 4 pounds $2.00 Direct labor $10 per DLH 0.5 DLH 5.00 Variable overhead $9 per DLH 0.5 DLH 4.50 Fixed overhead $16 per DLH 0.5 DLH 8.00 Total standard cost per test $19.50 At the end of March, London reported the following operational results: ● The company actually performed 2,250 core tests during the month. ● 8,500 pounds of direct materials were purchased during the month at a total cost of $5,600. ● 6,300 pounds of direct materials were used to conduct the core tests. ● 850 direct labor hours were worked at a total cost of $9,775. ●…
Carson Construction Consultants performs cement core tests in its Greenville laboratory. The following standard costs for the tests have been developed by the company’s controller, Landon Carson, based on performing 2,100 core tests per month. Standard Price Standard Quantity Standard Cost Direct materials $0.5 per pound 4 pounds $2.00 Direct labor $10 per DLH 0.5 DLH 5.00 Variable overhead $9 per DLH 0.5 DLH 4.50 Fixed overhead $16 per DLH 0.5 DLH 8.00 Total standard cost per test $19.50 At the end of March, London reported the following operational results: ● The company actually performed 2,250 core tests during the month. ● 8,500 pounds of direct materials were purchased during the month at a total cost of $5,600. ● 6,300 pounds of direct materials were used to conduct the core tests. ● 850 direct labor hours were worked at a total cost of $9,775. ●…
Coronado Construction Consultants performs cement core tests in its Greenville laboratory. The following standard costs for the tests have been developed by the company’s controller, Landon Coronado, based on performing 2,100 core tests per month. Standard Price Standard Quantity Standard Cost Direct materials $0.50 per pound 5 pounds $2.50 Direct labor $10 per DLH 0.50 DLH 5.00 Variable overhead $9 per DLH 0.50 DLH 4.50 Fixed overhead $16 per DLH 0.50 DLH 8.00 Total standard cost per test $20.00 At the end of March, London reported the following operational results: ● The company actually performed 2,260 core tests during the month. ● 8,500 pounds of direct materials were purchased during the month at a total cost of $5,700. ● 6,400 pounds of direct materials were used to conduct the core tests. ● 830 direct labor hours were worked at a total…
I. PROBLEM SOLVINGAnswer the following items on the space provided. Show your computations.At the beginning of 201A, ABC Company had the following standard costs for one (1) of its chemical products:Direct material (3 pounds at P3.20) P9.60Labor standard (0.9 hours at P9.00) 8.10Variable overhead (0.9 hours at P1.50) 1.35Fixed overhead (0.9 hours at P4.00) 3.60Total P22.65ABC computes its overhead rates using budgeted capacity, which is 144,000 units. Actual results for 201Aare:Units produced 140,000 unitsMaterials purchased 421,175 lbs. at P3.30Materials used 421,000 lbs.Direct labor 128,750 hrs at P8.90Fixed overhead P517,525Variable overhead 218,000Required: Indicate whether conditions are favorable or unfavorable. 4. Labor rate variance (LRV)5. Labor efficiency variance (LEV)6. Variable overhead (VOH) rate variance7. VOH efficiency variance8. Fixed overhead (FOH) spending variance9. FOH volume variance
I. PROBLEM SOLVINGAnswer the following items on the space provided. Show your computations.At the beginning of 201A, ABC Company had the following standard costs for one (1) of its chemical products:Direct material (3 pounds at P3.20) P9.60Labor standard (0.9 hours at P9.00) 8.10Variable overhead (0.9 hours at P1.50) 1.35Fixed overhead (0.9 hours at P4.00) 3.60Total P22.65ABC computes its overhead rates using budgeted capacity, which is 144,000 units. Actual results for 201Aare:Units produced 140,000 unitsMaterials purchased 421,175 lbs. at P3.30Materials used 421,000 lbs.Direct labor 128,750 hrs at P8.90Fixed overhead P517,525Variable overhead 218,000Required: Indicate whether conditions are favorable or unfavorable. 1. Material purchase price variance (MPPV)2. Material price usage variance (MPUV)3. Material quantity variance (MQV)4. Labor rate variance (LRV)5. Labor efficiency variance (LEV)6. Variable overhead (VOH) rate variance7. VOH efficiency variance8. Fixed overhead (FOH)…
For situations 1 trough 3, provide the following information for each number:a. An estimate of the non-value-added cost caused by each activityb. The root caused of the activity cost (such as plant layout, process design, and product design)c. The appropriate cost reduction measure: activity elimination, activity reduction, activity sharing,or activity selection Inspection time for a plant is 4,000 hours per year. The cost of inspection consists of salaries of four inspectors, totaling $100,000. Inspection also uses supplies costing $3 per inspection hour. A supplier evaluation program, product redesign, and process redesign reduced the need for inspection by creating a zero-defect environment. Each unit of a product required seven components, the average number of components is 7.3 due to component failure, requiring rework and extra components. By developing relations with the right suppliers and increasing the quality of the purchased component, the average number of components…
1. What are the fees for a Basic Exam, Advanced Exam, and a Basic Exam assuming the goal is to cover only variable and fixed direct costs? Assume that the audiology department is allocated $100,000 in total overhead by the clinic, and the department director has allocated $50,000 of this amount to the three services listed above. (To answer this question, assume that the allocation of overhead costs to each service is made on the basis ofnumberof visits.) 2. What are the fees for a Basic Exam, an Advanced Exam, and a Basic Exam assuming the overhead costs must be covered? 7.2 The audiology department at Randall Clinic offers many services to the clinic's patients. The three most common, along with cost and utilization data, are as follows: Copying and distribution of this PDF is prohibited without written permission. For permission, please contact Copyright Clearance Center at www.copyright.com Healthcare Finance Variable Cost Annual Direct Annual Number per Service Fixed Costs of…
A hospital analyzed their patient data in the ICU and categorized patients into two types: short-term and long-term. The standard quantities of labor and materials for each type of patient for 2011 are: Short term Long term Direct Material (lbs 9 21 Nursing labor (hrs.) 2.5 5 Standard price paid for direct materials (per lb.): $ 10.00 Standard rate for labor (per hour): $ 16.00 Variable overhead rate for ICU (per hour): $ 30.00 Fixed overhead rate for ICU (per hour): $ 40.00 **VOH and FOH are applied (used) on the basis of direct labor hours Actual operating data for 2011 is as follows: Total short-term patients: 4,000…
A hospital analyzed their patient data in the ICU and categorized patients into two types: short-term and long-term. The standard quantities of labor and materials for each type of patient for 2011 are:                                                            Short term                           Long term Direct Material (lbs                                9                                         21 Nursing labor (hrs.)                               2.5                                          5 Standard price paid for direct materials (per lb.): $              10.00 Standard rate for labor (per hour): $              16.00 Variable overhead rate for ICU (per hour): $              30.00 Fixed overhead rate for ICU (per hour): $              40.00 **VOH and FOH are applied (used) on the basis of direct labor hours Actual operating data for 2011 is as follows: Total short-term patients: 4,000…
A hospital analyzed their patient data in the ICU and categorized patients into two types: short-term and long-term. The standard quantities of labor and materials for each type of patient for 2011 are:                                                            Short term                           Long term Direct Material (lbs                                9                                         21 Nursing labor (hrs.)                               2.5                                          5 Standard price paid for direct materials (per lb.): $              10.00 Standard rate for labor (per hour): $              16.00 Variable overhead rate for ICU (per hour): $              30.00 Fixed overhead rate for ICU (per hour): $              40.00 **VOH and FOH are applied (used) on the basis of direct labor hours Actual operating data for 2011 is as follows: Total short-term patients: 4,000…
A hospital analyzed their patient data in the ICU and categorized patients into two types: short-term and long-term. The standard quantities of labor and materials for each type of patient for 2011 are:                                                            Short term                           Long term Direct Material (lbs                                9                                         21 Nursing labor (hrs.)                               2.5                                          5 Standard price paid for direct materials (per lb.): $              10.00 Standard rate for labor (per hour): $              16.00 Variable overhead rate for ICU (per hour): $              30.00 Fixed overhead rate for ICU (per hour): $              40.00 **VOH and FOH are applied (used) on the basis of direct labor hours Actual operating data for 2011 is as follows: Total short-term patients: 4,000…