--/1 Question 25 View Policies Current Attempt in Progress If a company purchases raw materials on account for $18830 when the standard cost is $15900, it will O debit Materials Quantity Variance for $2930. O debit Materials Price Variance for $2930. O credit Material Quantity Variance for $2930. O credit Materials Price Variance for $2930. Chp ins f12 f11 f10 f9 f8 17 f6 f5 & %3D 00 TO 96

--/1 Question 25 View Policies Current Attempt in Progress If a company purchases raw materials on account for $18830 when the standard cost is $15900, it will O debit Materials Quantity Variance for $2930. O debit Materials Price Variance for $2930. O credit Material Quantity Variance for $2930. O credit Materials Price Variance for $2930. Chp ins f12 f11 f10 f9 f8 17 f6 f5 & %3D 00 TO 96

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter9: Evaluating Variances From Standard Costs

Section: Chapter Questions

Problem 1BE: Direct materials variances Bellingham Company produces a product that requires 2.5 standard pounds...

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Variances Refer to Cornerstone Exercise 9.6. Required: 1. Calculate the variable overhead spending variance using the formula approach. (If you compute the actual variable overhead rate, carry your computations out to five significant digits and round the variance to the nearest dollar.) 2. Calculate the variable overhead efficiency variance using the formula approach. 3. Calculate the variable overhead spending variance and variable overhead efficiency variance using the three-pronged graphical approach. 4. What if 26,100 direct labor hours were actually worked in February? What impact would that have had on the variable overhead spending variance? On the variable overhead efficiency variance? Standish Company manufactures consumer products and provided the following information for the month of February: Required: 1. Calculate the fixed overhead spending variance using the formula approach. 2. Calculate the volume variance using the formula approach. 3. Calculate the fixed overhead spending variance and volume variance using the three-pronged graphical approach. 4. What if 129,600 units had actually been produced in February? What impact would that have had on the fixed overhead spending variance? On the volume variance?
Refer to the data in Exercise 9.15. Required: 1. Compute overhead variances using a two-variance analysis. 2. Compute overhead variances using a three-variance analysis. 3. Illustrate how the two- and three-variance analyses are related to the four-variance analysis. Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 120,000 units requiring 480,000 direct labor hours. (Practical capacity is 500,000 hours.) Annual budgeted overhead costs total 787,200, of which 556,800 is fixed overhead. A total of 119,400 units using 478,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were 230,600, and actual fixed overhead costs were 556,250. Required: 1. Compute the fixed overhead spending and volume variances. How would you interpret the spending variance? Discuss the possible interpretations of the volume variance. Which is most appropriate for this example? 2. Compute the variable overhead spending and efficiency variances. How is the variable overhead spending variance like the price variances of direct labor and direct materials? How is it different? How is the variable overhead efficiency variance related to the direct labor efficiency variance?
Refer to Exercise 9.17. Chypre, Inc., purchased the amount used of each direct material input on May 2 for the following actual prices: solvent mix for 5.20 per gallon, and aromatic compound for 8,010 per gallon. Required: 1. Compute and journalize the direct materials price variances. 2. Compute and journalize the direct materials usage variances. 3. Offer some possible reasons for why the variances occurred. Chypre, Inc., produces a cologne mist using a solvent mix (water and pure alcohol) and aromatic compounds (the scent base) that it sells to other companies for bottling and sale to consumers. Chypre developed the following standard cost sheet: On May 2, Chypre produced a batch of 1,000 gallons with the following actual results: Required: 1. Calculate the yield ratio. 2. Calculate the standard cost per unit of the yield. (Round to the nearest cent.) 3. Calculate the direct materials yield variance. (Round to the nearest cent.) 4. Calculate the direct materials mix variance. (Round to the nearest cent.)
Variance interpretation You have been asked to investigate some cost problems in the Assembly Department of Ruthenium Electronics Co., a consumer electronics company. To begin your investigation, you have obtained the following budget performance report for department for the last quarter: The following reports were also obtained: You also interviewed the Assembly Department supervisor. Excerpts from the interview follow: Q: What explains the poor performance in your department? A: Listen, you've got to understand what it's been like in this department recently. Lately, it seems no matter how hard we try, we can't seem to make the standards. I'm not sure what is going on, but we've been having a lot of problems lately. Q: What kind of problems? A: Well, for instance, all this quarter we've been requisitioning purchased parts from the material storeroom, and the pans just didn't fit together very well I'm not sure what is going on. but during most of this quarter we've had to scrap and sort purchased pansjust to get our assemblies put together. Naturally, all this takes time and material. And that's not all. Q: Go on. A: All this quarter, the work that we've been receiving from the Fabrication Department has been shoddy. I mean, maybe around 20% of the stuff that comes in from Fabrication just can't be assembled. The fabrication is all wrong. As a result, we've had to scrap and rework a lot of the stuff. Naturally, this has just shot our quantity variances. Interpret the variance reports in light of the comments by the Assembly Department supervisor.
Variance interpretation You have been asked to investigate some cost problems in the Assembly Department of Ruthenium Electronics Co., a consumer electronics company. To begin your investigation, you have obtained the following budget performance report for the department for the last quarter. Ruthenium Electronics Co.Assembly Department Quarterly Budget Performance Report Standard Quantity at Standard Rates Actual Quantity at Standard Rates Quantity Variances Direct labor 157,500 227,500 70,000 U Direct materials 297,500 385,000 87,500 U Total 455,000 612,500 157,500 U You also obtained the following reports: Ruthenium Electronics Co.Purchasing Department Quarterly Budget Performance Report Actual Quantity at Standard Rates Actual Quantity at Actual Rates Price Variance Direct materials 437,500 385,000 (52,500) F Ruthenium Electronics Co.Fabrication Department Quarterly Budget Performance Report Standard Quantity at Standard Rates Actual Quantity at Standard Rates Quantity Variances Direct labor 245,000 203,000 (42,000) F Direct materials 140,000 140,000 0 Total 385,000 343,000 (42,000) F You also interviewed the Assembly Department supervisor. Excerpts from the interview follow: Q: What explains the poor performance in your department? A: Listen, youve got to understand what its been like in this department recently. Lately, it seems no matter how hard we try, we cant seem to make the standards. Im not sure what is going on, but weve been having a lot of problems lately. Q: What kind of problems? A: Well, for instance, all this Quarter weve been requisitioning purchased parts from the material storeroom, and the parts just didnt fit together very well. Im not sure what is going on, but during most of this quarter, weve had to scrap and sort purchased partsjust to get our assemblies put together. Naturally, all this takes time and material. And thats not all. Q: Go on. A: All this Quarter the work we've been receiving from the Fabrication Department has been shoddy. I mean, maybe around 20% of the stuff that comes in from Fabrication just cant be assembled. The fabrication is all wrong. As a result we've had to scrap and rework a lot of the stuff. Naturally, this has just shot our quantity variances. Interpret the variance reports in light of the comments by the Assembly Department supervisor.
10-52 Materials and Labor Variances Refer to the information for Deporte Company above. Required: Compute the materials and labor variances associated with the changeover activity, labeling each variance as favorable or unfavorable. Use the following information for Exercises 10-52 and 10-53: Deporte Company produces single-colored T-shirts. Materials for the shirts are dyed in large vats. After dying the materials for a given color, the vats must be cleaned and prepared for the next batch of materials to be colored. The following standards for changeover for a given batch have been established: During the year, 79,500 pounds of material were purchased and used for the changeover activity. There were 30,000 batches produced, with the following actual prime costs:
Using variance analysis and interpretation Last year, Endicott Corp. adopted a standard cost system. Labor standards were set on the basis of time studies and prevailing wage rates. Materials standards were determined from materials specifications and the prices then in effect. On June 30, the end of the current fiscal year, a partial trial balance revealed the following: Standards set at the beginning of the year have remained unchanged. All inventories are priced at standard cost. What conclusions can be drawn from each of the four variances shown in Endicotts trial balance?
Direct materials and direct labor, variance analysis; factory overhead cost variance analysis Route 66 Tire Co. manufactures automobile tires. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 10.000 tires were as follows: Instructions Determine (a) the price variance, quantity variance, and total direct materials cost variance; (b) the rale variance, time variance, and total direct labor cost variance; and (c) Appendix: variable factory overhead controllable variance, the fixed factory overhead volume variance, and total factory overhead cost variance.
Required:1) Prepare a schedule of total standard manufacturing costs for the 24000 production of blocks in April 2021. 2) For the month of April, compute the following variances, indicating whether each is favourable (F) or unfavourable (U):a. Direct materials price variance (based on purchases) b. Direct materials efficiency variance