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
308 views

Botella Company produces plastic bottles. The unit for costing purposes is a case of 18 bottles. The following standards for producing one case of bottles have been established:

Chapter 10, Problem 70P, Botella Company produces plastic bottles. The unit for costing purposes is a case of 18 bottles. The , example  1

During December, 78,000 pounds of materials were purchased and used in production. There were 15,000 cases produced, with the following actual prime costs:

Chapter 10, Problem 70P, Botella Company produces plastic bottles. The unit for costing purposes is a case of 18 bottles. The , example  2

Required:

  1. 1. Compute the materials variances.
  2. 2. Compute the labor variances.
  3. 3. CONCEPTUAL CONNECTION What are the advantages and disadvantages that can result from the use of a standard costing system?

1.

To determine

Calculate the value of material price variance and material usage variance.

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:

Material Price Variance=[Actual Cost(Standard Price×Actual Quantity)]

Substitute $74,000 for actual cost, 78,000 units for actual quantity and $0.95 for standard price in the above formula.

Material Price Variance=$74,000($0.95×78,000)=$100(F)

Therefore, the material price variance is $100(F).

Use the following formula to calculate material usage variance:

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

Substitute $0

2.

To determine

Calculate the value of labor rate variance and labor efficiency variance.

3.

To determine

Explain the advantages and disadvantages of the use of standard costing.

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

Briefly explain what is meant by the term efficiency continuum.

Fundamentals of Financial Management (MindTap Course List)

What is trade associations role in encouraging ethics?

Foundations of Business (MindTap Course List)

When is a stock said to be in equilibrium? Why might a stock at any point in time not be in equilibrium?

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

What is a transposition error?

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

REGRESSION AND RECEIVABLES Edwards Industries has 320 million in sales. The company expects that its sales will...

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