ohan Company has the following balance irect labor variance accounts at year-enc Direct Materials Price Variance Direct Materials Quantity Variance Direct Labor Rate Variance
Q: The company applies varlable overhead on the basis of direct labor-hours. The direct materials…
A: Formula: Material Quantity Variance= SQ-AQ×SP where, SQ is Standard Quantity for Actual Output AQ is…
Q: The following data relate to direct labor costs for the current period: Standard costs 7,500 hours…
A: Solution.. Standard rate = $11.20 per hour Actual rate = $10.10 per hour Actual hours = 6,100…
Q: The purchasing department buys the quantities of raw materials that are expected to be used in…
A: Variance refers to the difference between the actual and the estimated results of the company.…
Q: What are the equations to find these answers? Calculate the direct materials price variance for…
A: Variance Analysis: Variance analysis is the process of ascertaining the deviations between actual…
Q: Harsha Ltd. Corporation wants to know about the variance in production cost.it is noted that mostly…
A: Harsha Ltd. Corporation wants to know about the variance in production cost.it is noted that mostly…
Q: The following labor standards have been established for a particular product: The following…
A: Variance is said to be difference between standard and actual cost.
Q: Relations Among Fixed Overhead Variances Selected information relating to Yost Company’s operations…
A: Fixed manufacturing overhead cost: The overhead costs which do alter according to the change in the…
Q: Williams Corporation reports the following direct labor information for November: Standard rate…
A: Variance is considered as the difference between budgeted value and actual results. The management…
Q: Information on Kimble Company's direct labor costs for the month of January is as follows: Actual…
A: Note:We’ll answer the first question since the exact one wasn’t specified. Please submit a new…
Q: For the current period, Juan Company's standard cost of direct materials is $170,000. The direct…
A: A variance is a difference between a planned amount and the actual amount incurred. Variance can be…
Q: Acme Inc. has the following information available: Actual price paid for material $0.90 Standard…
A: ln cost accounting variance is calculated in order to understand the deviations from the actual, it…
Q: Compute the direct material price variance for the year (indicate the ef ecting "F" for favorable…
A: Overheads are the various indirect material, labour and other costs incurred during a manufacturing…
Q: The following data relate to product no. 89 of Des Moines Corporation: at9 Direct material standard:…
A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…
Q: Compute the total overhead variance and controllable overhead variance for November and classify…
A: Total Overhead variance can be defined as the difference between the actual overhead incurred and…
Q: Direct labor variances The following data is provided for Bellingham Company: DATA Standard direct…
A: Standard costing: Under this costing method, the expected costs are used in the accounting records…
Q: Butrico Manufacturing Corporation uses a standard cost system, records materials price variances…
A: SOLUTION COST OF GOOD SOLD = SALES - GROSS PROFIT.
Q: Proration of Variances; Chapters 14 and 15 Butrico Manufacturing Corporation uses a standard cost…
A: 1.
Q: Butrico Manufacturing Corporation uses a standard cost system, records materials price variances…
A: Variance: Variance refers to the difference level in the actual cost incurred and standard cost. The…
Q: The following data relate to direct labor costs for the current period: Standard costs 6,900 hours…
A: Direct Labor Time Variance - Direct Labour time variance show the standard time and actual time…
Q: Kranberry Networks Ltd had implemented a standard costing system to aid it in assessing the…
A: Actual quantity of direct materials used and purchased = Actual cost of direct materials used and…
Q: hich of the following factor may not be included in the computation of the total materials variance?…
A: Formula Total Material variance = (Standard cost of material allowed for actual output) – (Actual…
Q: Required: 1. Compute the following varlances for June: a. Materials price and quantity variances. b.…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: The following data relate to direct labor costs for the current period: Standard costs 6,900 hours…
A: Given that: Actual hours = 6400 hours Standard hours = 6900 hours Standard rate per hour = $11.30…
Q: From the following data, determine the total actual costs incurred for direct material, direct…
A: Formula: Material price variance = (Standard price - Actual price)*Actual quantity purchased…
Q: APPLY THE CONCEPTS: Conduct the direct labor cost variance analysis Illustrated Example: Calculating…
A: When variances occur, they are described as being either favorable or unfavorable. When actual…
Q: Rancho Cucamonga Inc. established the following direct materials and direct labor standards for its…
A: Direct labor rate variance = [Actual rate/price ×Actual hours worked (quantity)] -[ Standard…
Q: Under the three variance method for analyzing factory overhead, the difference between the actual…
A: Variance represents the variation between the overheads planned by the entity and the overheads it…
Q: The following data relate to the direct materials cost for the production of 2,300 automobile tires:…
A: Direct Material price variance = (Actual price per pound - Standard price per pound)*Actual quantity…
Q: The following data relate to direct materials costs for February:
A: The variance analysis is an integral part of standard costing in the cost accountancy where…
Q: Acme Inc. has the following information available: Actual price paid for material $1.00 Standard…
A: Material price variance = (Actual price per pound - Standard price per pound)*Actual quantity…
Q: Rancho Cucamonga Inc. established the following direct materials and direct labor standards for its…
A: Given that standard price = $6 per hour Actual quantity = 10 x 3 hour = 30 hour
Q: units. For the three questions below, indicate two things: the amount of variance AND whether the…
A: ANSWER : FIRST LET US LIST ALL THE INFORMATION GIVEN : STANDARD RATE PER HOUR (SR) = 12 STANDARD…
Q: Calculating overhead variances Mills, Inc. is a competitor of Murry, Inc, from Exercise E2348. Mills…
A:
Q: equired: Compute the materials price and quantity variances for August. 2 Compute the labor rate and…
A: In this ques, we have to compute different variance. Variance is computed as difference between…
Q: Butrico Manufacturing Corporation uses a standard cost system, records materials price variances…
A: Answer - Direct Materials Price Variance - Direct material price variance is the difference…
Q: Wilms, Inc. uses a standard cost system. Overhead cost information for product A for the month of…
A: Net overhead variance shall comprise of both fixed overhead and variable overhead variance.
Q: Acme Inc. has the following information available: Actual price paid for material $1.00 Standard…
A: Standard cost means the cost which the company is expecting to be incurred on the basis of estimate…
Q: Required information [The following information applies to the questions displayed below.] Alvarez…
A: Journal entries are prepared to record the financial and non-financial transactions of the business…
Q: Acme Inc. has the following information available: $ 1.00 $ 1.20 Actual price paid for material…
A: Variance refers to a change between the expected value and the actual result. This term is usually…
Q: MajorNet Systems’s static budget predicted production of and sales of 100 connectors in August, but…
A: Journal entry: Journal entry is a set of economic events that can be measured in monetary terms.…
Q: From the data below prepare (a) an analysis of factory overhead variances using the two- variance…
A: In the standard costing method, the estimated amounts are used for the effective control of costs,…
Q: Required: Calculate the dollar amount of the total direct labor variance for July for Matthews &…
A: Variance: The difference between the actual cost or price and the budgeted (standard) cost or price…
Q: Kranberry Networks Ltd had implemented a standard cost of its operations. In the first quarter of…
A: Standard costing is the costing in which actual price/quantity is compared with the standard set.
Q: The following labor standards have been established for a particular product: The following…
A: Direct labor rate variance = (Actual Hours * Standard rate) - Actual rate
Q: Fixed Overhead Variances Primara Corporation has a standard cost system in which it applies overhead…
A: The predetermined overhead rate for machine hours is calculated by dividing the estimated…
Q: Prepare the journal entry to record these direct materials variances. Direct materials cost actually…
A: Given: Actual Direct materials cost $73,200Direct materials quantity variance $3,800…
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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- Smith Industries uses a cost system that carries direct materials inventory at a standard cost. The controller has established these standards for the cost of one basket (unit): Smith Industries made 3,000 baskets in July and used 15,500 pounds of material to make these units. Smith Industries paid $39,370 for the 15,500 pounds of material. A. What was the direct materials price variance for July? B. What was the direct materials quantity variance for July? C. What is the total direct materials cost variance? D. If Smith Industries used 15,750 pounds to make the baskets, what would be the direct materials quantity variance?Sitka Industries uses a cost system that carries direct materials inventory at a standard cost. The controller has established these standards for one ladder (unit): Sitka Industries made 3,000 ladders in July and used 8,800 pounds of material to make these units. Smith Industries bought 15,500 pounds of material in the current period. There was a $250 unfavorable direct materials price variance. A. How much in total did Sitka pay for the 15,500 pounds? B. What is the direct materials quantity variance? C. What is the total direct material cost variance? D. What ii 9,500 pounds were used to make these ladders, what would be the direct materials quantity variance? E. It there was a $340 favorable direct materials price variance, how much did Sitka pay for the 15,500 pounds of material?Potter Company has installed a JIT purchasing and manufacturing system and is using back-flush accounting for its cost flows. It currently uses a two-trigger approach with the purchase of materials as the first trigger point and the completion of goods as the second trigger point. During the month of June, Potter had the following transactions: There were no beginning or ending inventories. All goods produced were sold with a 60 percent markup. Any variance is closed to Cost of Goods Sold. (Variances are recognized monthly.) Required: 1. Prepare the journal entries that would have been made using a traditional accounting approach for cost flows. 2. Prepare the journal entries for the month using backflush costing.
- Potter Company has installed a JIT purchasing and manufacturing system and is using back-flush accounting for its cost flows. It currently uses a two-trigger approach with the purchase of materials as the first trigger point and the completion of goods as the second trigger point. During the month of June, Potter had the following transactions: There were no beginning or ending inventories. All goods produced were sold with a 60 percent markup. Any variance is closed to Cost of Goods Sold. (Variances are recognized monthly.) Required: 1. Prepare the journal entries for the month of May using backflush costing, assuming that Potter uses the completion of goods as the only trigger point. 2. Prepare the journal entries for the month of May using backflush costing, assuming that Potter uses the sale of goods as the only trigger point.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?At the beginning of the year, Lopez Company had the following standard cost sheet for one of its chemical products: Lopez computes its overhead rates using practical volume, which is 80,000 units. The actual results for the year are as follows: (a) Units produced: 79,600; (b) Direct labor: 158,900 hours at 18.10; (c) FOH: 831,000; and (d) VOH: 112,400. Required: 1. Compute the variable overhead spending and efficiency variances. 2. Compute the fixed overhead spending and volume variances.
- Potter Company has installed a JIT purchasing and manufacturing system and is using back-flush accounting for its cost flows. It currently uses a two-trigger approach with the purchase of materials as the first trigger point and the completion of goods as the second trigger point. During the month of June, Potter had the following transactions: 40,500 labor plus 222,750 overhead. There were no beginning or ending inventories. All goods produced were sold with a 60 percent markup. Any variance is closed to Cost of Goods Sold. (Variances are recognized monthly.) Required: Prepare the journal entries for the month of June using backflush costing, assuming that Potter uses the sale of goods as the second trigger point instead of the completion of goods.Ellis Companys labor information for September is as follows: A. Compute the standard direct labor rate per hour. B. Compute the direct labor time variance. C. Compute the standard direct labor rate if the direct labor rate variance was $2,712.30 (unfavorable).Warner Company has the following data for the past year: Warner uses the overhead control account to accumulate both actual and applied overhead. Required: 1. Calculate the overhead variance for the year and close it to cost of goods sold. 2. Assume the variance calculated is material. After prorating, close the variances to the appropriate accounts and provide the final ending balances of these accounts. 3. What if the variance is of the opposite sign calculated in Requirement 1? Provide the appropriate adjusting journal entries for Requirements 1 and 2.
- Eagle Inc. uses a standard cost system. During the most recent period, the company manufactured 115,000 units. The standard cost sheet indicates that the standard direct labor cost per unit is $1.50. The performance report for the period includes an unfavorable direct labor rate variance of $3,700 and a favorable direct labor time variance of $10,275. What was the total actual cost of direct labor incurred during the period?Madison Company uses the following rule to determine whether direct labor efficiency variances ought to be investigated. A direct labor efficiency variance will be investigated anytime the amount exceeds the lesser of 12,000 or 10 percent of the standard labor cost. Reports for the past five weeks provided the following information: Required: 1. Using the rule provided, identify the cases that will be investigated. 2. Suppose that investigation reveals that the cause of an unfavorable direct labor efficiency variance is the use of lower quality direct materials than are usually used. Who is responsible? What corrective action would likely be taken? 3. Suppose that investigation reveals that the cause of a significant favorable direct labor efficiency variance is attributable to a new approach to manufacturing that takes less labor time but causes more direct materials waste. Upon examining the direct materials usage variance, it is discovered to be unfavorable, and it is larger than the favorable direct labor efficiency variance. Who is responsible? What action should be taken? How would your answer change if the unfavorable variance were smaller than the favorable?As part of its cost control program, Tracer Company uses a standard costing system for all manufactured items. The standard cost for each item is established at the beginning of the fiscal year, and the standards are not revised until the beginning of the next fiscal year. Changes in costs, caused during the year by changes in direct materials or direct labor inputs or by changes in the manufacturing process, are recognized as they occur by the inclusion of planned variances in Tracers monthly operating budgets. The following direct labor standard was established for one of Tracers products, effective June 1, 2012, the beginning of the fiscal year: The standard was based on the direct labor being performed by a team consisting of five persons with Assembler A skills, three persons with Assembler B skills, and two persons with machinist skills; this team represents the most efficient use of the companys skilled employees. The standard also assumed that the quality of direct materials that had been used in prior years would be available for the coming year. For the first seven months of the fiscal year, actual manufacturing costs at Tracer have been within the standards established. However, the company has received a significant increase in orders, and there is an insufficient number of skilled workers to meet the increased production. Therefore, beginning in January, the production teams will consist of eight persons with Assembler A skills, one person with Assembler B skills, and one person with machinist skills. The reorganized teams will work more slowly than the normal teams, and as a result, only 80 units will be produced in the same time period in which 100 units would normally be produced. Faulty work has never been a cause for units to be rejected in the final inspection process, and it is not expected to be a cause for rejection with the reorganized teams. Furthermore, Tracer has been notified by its direct materials supplier that lower-quality direct materials will be supplied beginning January 1. Normally, one unit of direct materials is required for each good unit produced, and no units are lost due to defective direct materials. Tracer estimates that 6 percent of the units manufactured after January 1 will be rejected in the final inspection process due to defective direct materials. Required: 1. Determine the number of units of lower quality direct materials that Tracer Company must enter into production in order to produce 47,000 good finished units. 2. How many hours of each class of direct labor must be used to manufacture 47,000 good finished units? 3. Determine the amount that should be included in Tracers January operating budget for the planned direct labor variance caused by the reorganization of the direct labor teams and the lower quality direct materials. (CMA adapted)