BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

Solutions

Chapter
Section
BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
123 views

Use the following information to complete Brief Exercises 10-23 and 10-24:

Krumple Inc. produces aluminum cans. Production of 12-ounce cans has a standard unit quantity of 4.7 ounces of aluminum per can. During the month of April, 450,000 cans were produced using 1,875,000 ounces of aluminum. The actual cost of aluminum was $0.10 per ounce and the standard price was $0.08 per ounce. There are no beginning or ending inventories of aluminum.

10-24 Materials Variances

Refer to the information for Krumple Inc. above.

Required:

Calculate the materials price and usage variances using the columnar and formula approaches.

To determine

Compute the value of material price variance and usage variance with the help of columnar and formula approach.

Explanation

Variance:

The amount obtained when actual cost is deducted from budgeted cost is known as variance. Variance is calculated to find whether the cost is over applied or under applied.

Use the following formula to calculate material price variance with the help of columnar approach:

Material Price Variance=((Standard Price×Actual Quantity)(Actual Price×Actual Quantity))

Substitute $0.08 for standard price, 1,875,000 ounces for actual quantity and $0.10 for actual price in the above formula.

Material Price Variance=(($0.08×1,875,000 ounces)($0.10×1,875,000 ounces))=$37,500(U)

Therefore, the material price variance by columnar approach is $37,500 (U).

Use the following formula to calculate material usage variance with the help of columnar approach:

Material Usage Variance=((Standard Price×Actual Quantity)(Standard Price×Standard Quantity1))

Substitute $0.08 for standard price, 1,875,000 ounces for actual quantity and 2,115,000 ounces for standard quantity in the above formula.

Material Usage Variance=(($0.08×1,875,000 ounces)($0.08×2,115,000 ounces))=$19,200(F)

Therefore, the material usage variance by columnar approach is $19,200 (F)

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

How has social media changed the environment for business firms?

Foundations of Business (MindTap Course List)

Why should policymakers think about incentives?

Principles of Microeconomics (MindTap Course List)

YIELD TO CALL Six years ago the Singleton Company issued 20-year bonds with a 14% annual coupon rate at their 1...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

A revenue account will begin with the number ________ in the chart of accounts. (a) 1 (b) 2 (c) 3 (d) 4

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)