Now compute the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identify whether each variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbreviations used: AC actual cost; AQ-actual quantity, FOH- fixed overhead; SC standard cost; SQ standard quantity: VOH variable overhead.)VarianceVOH cost varianceVOH efficiency varianceFormulaNow compute the fixed overhead cost and volume variances. Select the required formulas, computequantity; FOH- fixed overhead; SC standard cost; SQ standard quantity.)FormulaVariancefixed overhead cost and volume variances, and identify whether each variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbreviations used: AC actual cost, AQ = actualFOH cost varianceFOH volume varianceRequirement 3. Have Smith's managers done a good job or a poor job controlling materials, labor, and overhead costs? Why?The variances computed in Requirement 2 suggest that the managers have done aManagers have done ajob controlling overhead costs as evidenced by the fact thatRequirement 4. Describe how Smith's managers can benefit from the standard costing system.Standard costing helps managers do the following:job controlling materials and labor costs. Theof the overhead variances areYdirect materials cost variance and direct labor efficiency variance help offset thedirect labor cost variance and direct materials efficiency variance. Smith Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. Smith allocates overhead based on yards of dired(Click the icon to view the selected data.)Read the requirements.Requirement 1. Prepare a flexible budget based on the actual number of recliners sold. (Round budget amounts per unit to the nearest cent.)Smith ReclinersFlexible BudgetActual Units (Recliners)Sales RevenueVariable Manufacturing Costs:Direct MaterialsDirect LaborVariable OverheadFixed Manufacturing Costs:Fixed OverheadTotal Cost of Goods SoldGross ProfitBudgetAmountsper UnitDirect materials cost variance WDirect labor cost variance=Direct materials efficiency varianceDirect labor efficiency variance.Formula=VarianceFormulaData tableSalesVarianceVariable Manufacturing Costs:Direct Materials(6,150 yds @ $8.60/yd.)(6,300 yds @ $8.40/yd.)(10,250 DLHr@ $11.20/DLHr)(9,850 DLHr@ $11.30/DLHr)Variable Overhead (6,150 yds. @ $5.10/yd.)(6,300 yds. @ $6.50/yd.)Direct Labor(1,025 recliners x $500 each)(1,005 recliners x $480 each)Fixed Manufacturing Costs:Fixed OverheadTotal Cost of Goods SoldGross ProfitPrintStatic Budget(1,025 recliners)$512,500$Done52,890114,80031,365Requirement 2. Compute the cost variance and the efficiency variance for direct materials and for direct labor. For manufacturing overhead, compute the variable overhead cost, variable overhead efficiency, fixed overhead cost, and fixed overhead volume variances. Round to the nearest dollar.Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbreviations used: AC actual cost; AQ actual quantity: FOH = fixedoverhead; SC standard cost; SQ standard quantity.)Actual Results(1,005 recliners)$62,730261,785250,715 S482,40052,920Next compute the efficiency variances. Select the required formulas, compute the efficiency variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbreviations used: AC actual cost; AQ actual quantity: FOH= fixed overhead; SC standard cost; SQ standard quantity)111,30540,95064,730269,905212,495the required formulas compute the variable overhead cost and efficiency variances, and identify whether each variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbreviations used: AC = actual cost; AQ-

The study of variances between actual behavior and predicted or planned behavior in budgeting or…

Smith Redliners manufactures leather recliners and uses flexible budgeting and a standard cost system. Smith allocates overhead based on yards of dired (Click the loon to view the selected data) Read the requirements. Requirement 1. Prepare a flexible budget based on the actual number of recliners sold. (Round budget amounts per unit to the nearest cent.) Smith Recliners Flexible Budget Actual Units (Recliners) Sales Revenue Variable Manufacturing Costs: Direct Materials Budget Amounts per Unit Data table Variance Sales (1,025 recliners x $500 each) (1,005 recliners x $480 each) Variable Manufacturing Costs Direct Materials (6,150 yds @ $8.60/yd.) (6,300 yds @ $8.40/yd.) (10,250 DLH @ $11.20/DLH) (9,850 DLHr@$11.30/DLH) Variable Overhead (6,150 yds @ $5.10/yd.) (6,300 yds @ $6.50/yd.) Direct Labor Fixed Manufacturing Costs: Fixed Overhead Total Cost of Goods Sold Gross Profit Static Budget (1,025 recliners) 512,500 $ Print $ 52.890 Done 114,800 31,365 Actual Results (1,005 recliners) $ 62,730 261,785 250,715 S 452,400 52.920 Direct Labor Variable Overhead Fixed Manufacturing Costs: Fixed Overhead Total Cost of Goods Sold Gross Profit Requirement 2. Compute the cost variance and the efficiency variance for direct materials and for direct labor. For manufacturing overhead, compute the variable overhead cost, variable overhead efficiency, fixed overhead cost, and fixed overhead volume variances. Round to the nearest dollar Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbreviations used: AC actual cost; AQ actual quantity: FOH = fixed overhead; SC standard cost; SQ standard quantity) 111,305 40,950 64,730 269.905 212.495

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter9: Evaluating Variances From Standard Costs

Section: Chapter Questions

Problem 3E: Salisbury Bottle Company manufactures plastic two-liter bottles for the beverage industry. The cost...