Exercise 17-22 (Algo) Variable Cost Variances: Materials Purchased and Materials Used Are Not Equal(LO 17-2)Fischer Fabrication reported the following information concerning its direct materials:Direct materials purchased (actual)Standard cost of materials purchasedStandard price times actual amount of materials used$.368,000$ 354,500$326,50055,500 units$6Actual productionStandard direct materials costs per unit producedRequired:Compute the direct materials cost variances.Note: Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not selecteither option.Direct MaterialsPrice varianceEfficiency varianceTotal direct materials cost variance Problem 16-75 (Algo) Comprehensive Variance Problem (LO 16-5, 6)Robinwood Fixtures manufactures two products, K4 and X7. The company prepares its master budget on the basis of standard costs.The following data are for September:StandardsDirect naterialsDirect laborVariable overhead (per direct labor-hour),Fixed overhead (per month)Expected activity (direct labor-hours))Actual resultsDirect material (purchased and used)Direct laborVariable overheadFixed overheadUnits produced (actual)Direct materialsDirect laborVariable overheadFleed overheadPrice VarianceK40.75 pounds at $7.00 per pound1.25 hours at $25.00 per hour$.20.20$ 415,20017,300Efficiency Variance9,880 pounds at $6.40 per pound14,750 hours at $25.30 per hour$ 311,060$ 381,740Required:a. Prepare a variance analysis for each variable cost for each product.b. Prepare a fixed overhead variance analysis for each productNote: For all requirements, Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" forfavorable, or "U" for unfavorable. If there is no effect, do not select either option.12,100 unitsProduction VolumeVarianceX71 pound at $7.60 per pound1.50 hours at $30 per hour$ 22.00$ 492,45023,450Price Variance14,158 pounds at $7.90 per pound22,250 hours at $31.60 per hour$ 459,212$ 490,04814,450 unitsEfficiency VarianceProduction VolumeVariance

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Description: Exercise 17-22 (Algo) Variable Cost Variances: Materials Purchased and Materials Used Are Not Equal(LO 17-2)Fischer Fabrication reported the following information concerning its direct materials:Direct materials purchased (actual)Standard cost of ma

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Exercise 17-22 (Algo) Variable Cost Variances: Materials Purchased and Materials Used Are Not Equal (LO 17-2) Fischer Fabrication reported the following information concerning its direct materials: Direct materials purchased (actual) Standard cost of materials purchased Standard price times actual amount of materials used $368,000 $ 354,500 $326,500 55,500 units $6 Actual production Standard direct materials costs per unit produced Required: Compute the direct materials cost variances. Note: Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Direct Materials Price variance Efficiency variance Total direct materials cost variance

Exercise 17-22 (Algo) Variable Cost Variances: Materials Purchased and Materials Used Are Not Equal (LO 17-2) Fischer Fabrication reported the following information concerning its direct materials: Direct materials purchased (actual) Standard cost of materials purchased Standard price times actual amount of materials used $368,000 $ 354,500 $326,500 55,500 units $6 Actual production Standard direct materials costs per unit produced Required: Compute the direct materials cost variances. Note: Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Direct Materials Price variance Efficiency variance Total direct materials cost variance

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter13: Budgeting And Standard Costs

Section: Chapter Questions

Problem 13.5P: Direct materials and direct labor, variance analysis; factory overhead cost variance analysis Route...

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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?
Georgia Gasket Co. budgets 8,000 direct labor hours for the year. The total overhead budget is expected to amount to 20,000. The standard cost for a unit of the companys product estimates the variable overhead as follows: The actual data for the period follow: Using the four-variance method, calculate the overhead variances. (Hint: First compute the budgeted fixed overhead rate.)
(Appendix) Calculating factory overhead: four variances Atlanta Adhesives Inc. budgets 15,000 direct labor hours for the year. The total overhead budget is expected to amount to 42,000. The standard cost for a unit of the companys product estimates the variable overhead as follows: The actual data for the period follow: Using the four-variance method, calculate the overhead variances. (Hint: First compute the budgeted fixed overhead rate.)
Calculating factory overhead: two variances Monrovia Manufacturing Inc. normally produces 10,000 units of product A each month. Each unit requires 4 hours of direct labor, and factory overhead is applied on a direct labor hour basis. Fixed costs and variable costs in factory overhead at the normal capacity are 10 and 5 per unit, respectively. Cost and production data for June follow: a. Calculate the flexible-budget variance. b. Calculate the production-volume variance. c. Was the total factory overhead under- or overapplied? By what amount?
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?
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?
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Calculating factory overhead: two variances Munoz Manufacturing Co. normally produces 10,000 units of product X each month. Each unit requires 2 hours of direct labor, and factory overhead is applied on a direct labor hour basis. Fixed costs and variable costs in factory overhead at the normal capacity are 2.50 and 1.50 per direct labor hour, respectively. Cost and production data for May follow: a. Calculate the flexible-budget variance. b. Calculate the production-volume variance. c. Was the total factory overhead under- or overapplied? By what amount?
Materials and labor variances Fausto Fabricators Inc. uses a standard cost system to account for its single product. The standards established for the product include the following: The following operating data came from the records for the month: In process, beginning inventory, none. In process, ending inventory, 800 units, 80% complete as to labor; material is issued at the beginning of processing. Completed during the month, 5,600 units. Materials issued to production were 51,680 lb @ .55 per pound. Direct labor was 384,000 for 40,000 hours worked. Required: Calculate the following variances, using the diagram format in Figure 8-4. 1. Materials price. 2. Materials quantity. 3. Net materials variance. 4. Labor rate. 5. Labor efficiency. 6. Net labor variance. (Hint: Before determining the standard quantity for materials and labor, you must first compute the equivalent units of production for materials and labor.)
Standard cost summary; materials and labor cost variances Perkins Processors Inc. produces an average of 10,000 units each month. The factory standards are 20,000 hours of direct labor and 10,000 pounds of materials for this volume. The standard cost of direct labor is 9.00 per hour, and the standard cost of materials is 4.00 per pound. The standard factory overhead at this level of production is 20,000. During the current month the production and cost reports reflected the following information: On the basis of this information: 1. Prepare a standard cost summary. 2. Calculate the materials (use the materials purchase price variance) and labor cost variances, and indicate whether they are favorable or unfavorable, using the formulas on pages 421422 and 424.
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Using variance analysis and interpretation Last year, Wrigley 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 Wrigleys trial balance?