A B D $ 900,000 $ 250,000 $ 900,000 $ 420,000 $ 900,000 $ 375,000 $ 900,000 $ 395,000 Sales Revenue Cost of Goods Sold (+) Variances: Direct Materials 15,000 15,000 Direct Labor 5,000 5,000 Manufacturing Overhead (+) Other Costs (AlI Fixed) 25,000 25,000 350,000 475,000 350,000 350,000 $ 770,000 $ 130,000 $ 770,000 $ 130,000 $ 770,000 $ 130,000 Total Costs $745,000 $ 155,000 Net Income Where applicable, Rob allocates both fixed and variable manufacturing overhead using direct labor hours as the driver. Blackstar carries no work-in-process inventory. Standard costs have been stable over time, and Rob writes off all variances to cost of goods sold. For 2017, there was no flexible budget variance for fixed overhead. In addition, the direct labor variance represents a price variance. 1. Match each method below with the appropriate income statement (A, B, C, or D): Required Actual Absorption costing Normal Absorption costing Standard Absorption costing Standard Variable costing 2. During 2017, how did Blackstar's level of finished-goods inventory change? In other words, is it pos- sible to know whether Blackstar's finished-goods inventory increased, decreased, or stayed constant during the year? 3. From the four income statements, can you determine how the actual volume of production during the year compared to the denominator (expected) volume level? 4. Did Blackstar have a favorable or unfavorable variable overhead spending variance during 2017?
A B D $ 900,000 $ 250,000 $ 900,000 $ 420,000 $ 900,000 $ 375,000 $ 900,000 $ 395,000 Sales Revenue Cost of Goods Sold (+) Variances: Direct Materials 15,000 15,000 Direct Labor 5,000 5,000 Manufacturing Overhead (+) Other Costs (AlI Fixed) 25,000 25,000 350,000 475,000 350,000 350,000 $ 770,000 $ 130,000 $ 770,000 $ 130,000 $ 770,000 $ 130,000 Total Costs $745,000 $ 155,000 Net Income Where applicable, Rob allocates both fixed and variable manufacturing overhead using direct labor hours as the driver. Blackstar carries no work-in-process inventory. Standard costs have been stable over time, and Rob writes off all variances to cost of goods sold. For 2017, there was no flexible budget variance for fixed overhead. In addition, the direct labor variance represents a price variance. 1. Match each method below with the appropriate income statement (A, B, C, or D): Required Actual Absorption costing Normal Absorption costing Standard Absorption costing Standard Variable costing 2. During 2017, how did Blackstar's level of finished-goods inventory change? In other words, is it pos- sible to know whether Blackstar's finished-goods inventory increased, decreased, or stayed constant during the year? 3. From the four income statements, can you determine how the actual volume of production during the year compared to the denominator (expected) volume level? 4. Did Blackstar have a favorable or unfavorable variable overhead spending variance during 2017?
Chapter5: Process Costing
Section: Chapter Questions
Problem 7MC: What is the cost of direct labor f the conversion costs are $330.000 and manufacturing overhead is...
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Costing methods and variances, comprehensive. Rob Kapito, the controller of Blackstar Paint Supply Company, has been exploring a variety of internal accounting systems. Rob hopes to get the input of Blackstar’s board of directors in choosing one. To prepare for his presentation to the board, Rob applies four different cost accounting methods to the firm’s operating data for 2017. The four methods are actual absorption costing, normal absorption
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