Exercise 9-4 Direct Materials Variances [LO9-4] Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the company's products, a football helmet for the North American market, requires a special plastic. During the quarter ending June 30, the company manufactured 3,600 helmets, using 2,484 kilograms of plastic. The plastic cost the company $16,394. According to the standard cost card, each helmet should require 0.63 kilograms of plastic, at a cost of $7.00 per kilogram. Required: 1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,600 helmets? 2. What is the standard materials cost allowed (SQ x SP) to make 3,600 helmets? 3. What is the materials spending variance? 4. What is the materials price variance and the materials quantity variance? (For requirements 3 and 4, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.) 1. Standard quantity of kilograms allowed 2. Standard cost allowed for actual output 3. Materials spending variance 4. Materials price variance Materials quantity variance

Exercise 9-4 Direct Materials Variances [LO9-4] Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the company's products, a football helmet for the North American market, requires a special plastic. During the quarter ending June 30, the company manufactured 3,600 helmets, using 2,484 kilograms of plastic. The plastic cost the company $16,394. According to the standard cost card, each helmet should require 0.63 kilograms of plastic, at a cost of $7.00 per kilogram. Required: 1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,600 helmets? 2. What is the standard materials cost allowed (SQ x SP) to make 3,600 helmets? 3. What is the materials spending variance? 4. What is the materials price variance and the materials quantity variance? (For requirements 3 and 4, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.) 1. Standard quantity of kilograms allowed 2. Standard cost allowed for actual output 3. Materials spending variance 4. Materials price variance Materials quantity variance

Accounting

27th Edition

ISBN:9781337272094

Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Chapter23: Evaluating Variances From Standard Costs

Section: Chapter Questions

Problem 23.23.4CP: Variance interpretation You have been asked to investigate some cost problems in the Assembly...

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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.
Problem 16-71 (Algo) Find Actual and Budget Amounts from Variances (LO 16-5, 6) J&W Corporation manufactures a new electronic game console. The current standard cost sheet for a game console follows. Direct materials, ? kilograms at $6 per kilogram $ ? per game Direct labor, 0.75 hours at ? per hour ? per game Overhead, 0.75 hours at ? per hour ? per game Total costs $ 39 per game Assume that the following data appeared in J&W’s records at the end of the past month. Actual production 59,000 units Actual sales 56,000 units Materials (131,000 kilograms) ? Materials price variance 58,000 U Materials efficiency variance 42,600 U Direct labor price variance 44,550 U Direct labor (40,500 hours) 741,150 Underapplied overhead (total) 19,900 U There are no materials inventories. Required: a-1. Complete the standard cost sheet for a game console given below.a-2. Prepare a variance analysis for…
Exercise 16-46 (Algo) Fixed Cost Variances (LO 16-6) Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no inventories. The master budget calls for the company to manufacture and sell 126,000 liters at a budgeted price of $270 per liter this year. The standard direct cost sheet for one liter of the preservative follows. Direct materials (2 pounds @ $17) $ 34 Direct labor (0.5 hours @ $50) 25 Variable overhead is applied based on direct labor hours. The variable overhead rate is $150 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $23 per unit. All non-manufacturing costs are fixed and are budgeted at $2.5 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $816,000 unfavorable. The following is the actual income statement (in thousands of dollars) for the year.…
Exercise 16-46 (Algo) Fixed Cost Variances (LO 16-6) Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no inventories. The master budget calls for the company to manufacture and sell 126,000 liters at a budgeted price of $270 per liter this year. The standard direct cost sheet for one liter of the preservative follows. Direct materials (2 pounds @ $17) $ 34 Direct labor (0.5 hours @ $50) 25 Variable overhead is applied based on direct labor hours. The variable overhead rate is $150 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $23 per unit. All non-manufacturing costs are fixed and are budgeted at $2.5 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $816,000 unfavorable. The following is the actual income statement (in thousands of dollars) for the year.…
EXERCISE 9–6 Critique a Variance Report [LO9–6] The Terminator Inc. provides on-site residential pest extermination services. The company has several mobile teams who are dispatched from a central location in company-owned trucks. The company uses the number of jobs to measure activity. At the beginning of April, the company budgeted for 100 jobs, but the actual number of jobs turned out to be 105. A report comparing the budgeted revenues and costs to the actual revenues and costs appears below: [picture] Required:Is the above variance report useful for evaluating how well revenues and costs were controlled during April? Why, or why not?
20. The standard quantity allowed for the units produced was 4,500 pounds, the standard price was P2.50 per pound, and the materials quantity variance was P375 favorable. Each unit uses 1 pound of materials. How many units were actually produced? a. • 4,350 b. • 4,500 c. • 11,625 d. • 4,650
Problem 10-9 (Algo) Comprehensive Variance Analysis [LO10-1, LO10-2, LO10-3] Marvel Parts, Incorporated, manufactures auto accessories. One of the company’s products is a set of seat covers that can be adjusted to fit nearly any small car. The company has a standard cost system in use for all of its products. According to the standards that have been set for the seat covers, the factory should work 1,075 hours each month to produce 2,150 sets of covers. The standard costs associated with this level of production are: Total Per Set of Covers Direct materials $ 54,825 $ 25.50 Direct labor $ 10,750 5.00 Variable manufacturing overhead (based on direct labor-hours) $ 5,375 2.50 $ 33.00 During August, the factory worked only 800 direct labor-hours and produced 2,500 sets of covers. The following actual costs were recorded during the month: Total Per Set of Covers Direct materials (12,500 yards) $ 58,750 $ 23.50 Direct labor $ 13,000 5.20 Variable…
Direct Materials Variances Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the company’s products, a football helmet for the North American market, requires a special plastic. During the quarter ending June 30, the company manufactured 35,000 helmets, using 22,500 kilograms of plastic. The plastic cost the company $171,000. According to the standard cost card, each helmet should require 0.6 kilograms of plastic, at a cost of $8 per kilogram. Required: 1. What is die standard quantity of kilograms of plastic (SQ) that is allowed to make 35,000 helmets? 2. What is the standard materials cost allowed (SQ × SP) to make 35,000 helmets? 3. What is the materials spending variance? 4. What is the materials price variance and the materials quantity variance?
(18 pts) 2. Wonderful! Not only did our salespeople do a good job in meeting the sales budget this year, but our production people did a good job in controlling costs as well, “ said Kim Clark, president of Martell Company. “ Our $18,000 overall manufacturing cost variance is only 1.5 % of the standard $1,200,000 standard cost of products sold during the year. That’s well within the 3 % parameter set by management for acceptable variances. It looks like everyone will be in line for a bonus this year.” The company produces and sells a single product. A standard cost card for the product follows: Standard Cost Card - Per Unit of Product Direct materials, 2 feet at $8.45 ……………… $16.90 Direct labor, 1.4 hours at $8 ………………… 11.20 Variable overhead, 1.4 hours at $2.50 ……….. 3.50 Fixed overhead, 1.4 hours at $6 ……………… 8.40 Standard cost per unit………………… $ 40.00…
Exercise 16-36 (Algo) Variable Cost Variances (LO 16-5) Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no inventories. The master budget calls for the company to manufacture and sell 116,000 liters at a budgeted price of $195 per liter this year. The standard direct cost sheet for one liter of the preservative follows. Direct materials (2 pounds @ $12) $ 24 Direct labor (0.5 hours @ $40) 20 Variable overhead is applied based on direct labor hours. The variable overhead rate is $100 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $50 per unit. All non-manufacturing costs are fixed and are budgeted at $2 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $606,000 unfavorable. The following is the actual income statement (in thousands of dollars) for the year.…