28) Variance analysis The standard materials cost of product D456 is as follows. Rwf *000 Material X 3 kg at Rwf2,000 per kg 5 kg at Rwf3,600 per kg Material Y 18 24 During period 2, 2,000 kg of material X (costing Rwf4,100,000) and 2,400 kg of material Y (costing Rwf9,600,000) were used to produce 500 units of D456.

28) Variance analysis The standard materials cost of product D456 is as follows. Rwf *000 Material X 3 kg at Rwf2,000 per kg 5 kg at Rwf3,600 per kg Material Y 18 24 During period 2, 2,000 kg of material X (costing Rwf4,100,000) and 2,400 kg of material Y (costing Rwf9,600,000) were used to produce 500 units of D456.

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Description: 28) Variance analysisThe standard materials cost of product D456 is as follows.Rwf "000Material X3 kg at Rwf2,000 per kg65 kg at Rwf3,600 per kgMaterial Y1824During period 2, 2,000 kg of material X (costing Rwf4,100,000) and 2,400 kg of material Y(c

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter13: Budgeting And Standard Costs

Section: Chapter Questions

Problem 13.4P: Direct materials and direct labor variance analysis Faucet Industries Inc. manufactures faucets in a...

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Recompute the variances from the second Acme Inc. exercise using $0.0725 as the standard cost of the material and $14 as the standard labor cost per hour. How has your explanation of the variances changed?
In all of the exercises involving variances, use F and U to designate favorable and unfavorable variances, respectively. E8-1 through E8-5 use the following data: The standard operating capacity of Tecate Manufacturing Co. is 1,000 units. A detailed study of the manufacturing data relating to the standard production cost of one product revealed the following: 1. Two pounds of materials are needed to produce one unit. 2. Standard unit cost of materials is 8 per pound. 3. It takes one hour of labor to produce one unit. 4. Standard labor rate is 10 per hour. 5. Standard overhead (all variable) for this volume is 4,000. Each case in E8-1 through E8-5 requires the following: a. Set up a standard cost summary showing the standard unit cost. b. Analyze the variances for materials and labor. c. Make journal entries to record the transfer to Work in Process of: 1. Materials costs 2. Labor costs 3. Overhead costs (When making these entries, include the variances.) d. Prepare the journal entry to record the transfer of costs to the finished goods account. Standard unit cost; variance analysis; journal entries 1,000 units were started and finished. Case 1: All prices and quantities for the cost elements are standard, except for materials cost, which is 8.50 per pound. Case 2: All prices and quantities for the cost elements are standard, except that 1,900 lb of materials were used.
Direct materials and direct labor variance analysis Faucet Industries Inc. manufactures faucets in a small manufacturing facility. The faucets are made from zinc. Faucet Industries has 60 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows: Instructions Determine (a) the standard cost per unit for direct materials and direct labor; (h) the price variance, quantity variance, and total direct materials cost variance; and (c) the rate variance, time variance, and total direct labor cost variance.
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.
Kavallia Company set a standard cost for one item at 328,000; allowable deviation is 14,500. Actual costs for the past six months are as follows: Required: 1. Calculate the variance from standard for each month. Which months should be investigated? 2. What if the company uses a two-part rule for investigating variances? The allowable deviation is the lesser of 4 percent of the standard amount or 14,500. Now which months should be investigated?
The management of Golding Company has determined that the cost to investigate a variance produced by its standard cost system ranges from 2,000 to 3,000. If a problem is discovered, the average benefit from taking corrective action usually outweighs the cost of investigation. Past experience from the investigation of variances has revealed that corrective action is rarely needed for deviations within 8% of the standard cost. Golding produces a single product, which has the following standards for materials and labor: Actual production for the past 3 months follows, with the associated actual usage and costs for materials and labor. There were no beginning or ending raw materials inventories. Required: 1. What upper and lower control limits would you use for materials variances? For labor variances? 2. Compute the materials and labor variances for April, May, and June. Identify those that would require investigation by comparing each variance to the amount of the limit computed in Requirement 1. Compute the actual percentage deviation from standard. Round all unit costs to four decimal places. Round variances to the nearest dollar. Round variance rates to three decimal places so that percentages will show to one decimal place. 3. CONCEPTUAL CONNECTION Let the horizontal axis be time and the vertical axis be variances measured as a percentage deviation from standard. Draw horizontal lines that identify upper and lower control limits. Plot the labor and material variances for April, May, and June. Prepare a separate graph for each type of variance. Explain how you would use these graphs (called control charts) to assist your analysis of variances.
Refer to Cornerstone Exercise 8.13. In March, Nashler Company produced 163,200 units and had the following actual costs: Required: 1. Prepare a performance report for Nashler Company comparing actual costs with the flexible budget for actual units produced. 2. What if Nashler Companys actual direct materials cost were 1,175,040? How would that affect the variance for direct materials? The total cost 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?
Given the following information: 2a) the standard material costs of finished product X are as follows 2kg raw material Y @R10 per kg Actual information Purchases of raw material Y 1000kg @R9, 50 per kg Issues of raw material Y 600 kg Units of product X manufactured 290 units Calculate the following variances in respect of material i) Purchase price variance ( 5) ii) Issue price variance (5) iii) Quantity variance (5) iv) Total material variance if an issue price variance is used (5)
9) Given data provided determine the DM price, quantity and total variances. Actual: 680,000 lbs. at $3.10 per pound Standard 640,000 lbs. at $3.50 per pound `
An adverse materials price variance of £1,001 has been reported for the period. Actualexpenditure on materials was £20,251 and 1,540 kg were purchased. What must be the standardcost per kg?a. £13.15b. £13.50c. £12.50d. £13.80
5. Acme Inc. has the following information available: Actual price paid for material $1.00 Standard price for material $0.90 Actual quantity purchased and used in production 100 Standard quantity for units produced 90 Actual labor rate per hour $15 Standard labor rate per hour $14 Actual hours 200 Standard hours for units produced 190 NOTE: All dollar amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). For the variance conditions, your answer is either "F” (for Favorable) or "U” (for Unfavorable) - capital letter and no quotes. Complete the following table of variances and their conditions: Variance Variance Amount Favorable (F) or Unfavorable (U) Material Price ? ? Material Quantity ? ? Total DM Cost Variance ? ? Labor Rate ? ? Labor Efficiency ? ? Total DL Cost Variance ? ?