Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 11, Problem 44P
For each of the following independent Cases A and B, fill in the missing information. The company budgets and applies production overhead costs on the basis of direct-labor hours. (U denotes unfavorable variance; F denotes favorable variance.)
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Haliburton Mills Inc. is a large producer of men's and women's clothing. The company uses standard costs for all of its products. The
standard costs and actual costs for a recent period are given below for one of the company's product lines (per unit of product):
Standard
Cost
Actual
Cost
Direct materials:
Standard: 2.0 metres at $4.50 per metre
Actual: 2.4 metres at $4.25 per metre
Direct labour:
Standard: 2.4 hours at $3.50 per hour
Actual: 2.0 hours at $3.85 per hour
$ 9.00
$10.20
8.48
7.70
Variable manufacturing overhead:
Standard: 2.4 hours at $3.00 per hour
Actual: 2.0 hours at $3.65 per hour
7.20
7.30
Fixed manufacturing overhead:
Standard: 2.4 hours at $3.90 per hour
Actual: 2.0 hours at $3.95 per hour
Total cost per unit
9.36
7.90
$33.96
$ 33.10
Actual costs: 4,580 units at $33.10
Standard costs: 4,500 units at $33.96
Difference in cost-favourable
$148,950
152,820
$ 3,870
During this period, the company produced 4,500 units of product. A comparison of standard and actual costs…
Record the overhead costs, including the unfavorable volume and unfavorable controllable variances.
same way as the chart above
Record the direct labor costs, including the favorable efficiency variance and unfavorable rate variance.
same way as the chart above
The following information is available for a manufacturer. Compute the direct labor rate and efficiency variances and label them as favorable (F) or unfavorable (U).
Chapter 11 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 11 - Distinguish between static and flexible budgets.Ch. 11 - Explain the advantage of using a flexible budget.Ch. 11 - Why are flexible overhead budgets based on...Ch. 11 - Distinguish between a columnar and a formula...Ch. 11 - Show, using T-accounts, how production overhead is...Ch. 11 - How have advances in manufacturing technology...Ch. 11 - What is the interpretation of the...Ch. 11 - Jeffries Companys only variable-overhead cost is...Ch. 11 - What is the interpretation of the...Ch. 11 - Distinguish between the interpretations of the...
Ch. 11 - What is the fixed-overhead budget variance?Ch. 11 - What is the correct interpretation of the...Ch. 11 - Describe a common but misleading interpretation of...Ch. 11 - Draw a graph showing budgeted and applied fixed...Ch. 11 - What types of organizations use flexible budgets?Ch. 11 - What is the conceptual problem of applying fixed...Ch. 11 - Distinguish between the control purpose and the...Ch. 11 - Why are fixed-overhead costs sometimes called...Ch. 11 - Draw a graph showing both budgeted and applied...Ch. 11 - Give one example of a plausible activity base to...Ch. 11 - Explain how an activity-based flexible budget...Ch. 11 - Crystal Glassware Company has the following...Ch. 11 - Refer to the data in the preceding exercise. Use...Ch. 11 - Crystal Glassware Company has the following...Ch. 11 - The following data are the actual results for...Ch. 11 - Evening Star, Inc. produces binoculars of two...Ch. 11 - The controller for Rainbow Childrens Hospital,...Ch. 11 - You recently received the following note from the...Ch. 11 - You brought your work home one evening, and your...Ch. 11 - Refer to DCdesserts.coms activity-based flexible...Ch. 11 - Montoursville Control Company, which manufactures...Ch. 11 - Prob. 33ECh. 11 - The following data pertain to Aurora Electronics...Ch. 11 - Calgary Paper Company produces paper for...Ch. 11 - Gibralter Insurance Company uses a flexible...Ch. 11 - Country time Studios is a recording studio in...Ch. 11 - Newark Plastics Corporation developed its overhead...Ch. 11 - Johnson Electrical produces industrial ventilation...Ch. 11 - Fall City Hospital has an outpatient clinic....Ch. 11 - Maxwell Company uses a standard cost accounting...Ch. 11 - Mark Fletcher, president of SoftGro, Inc., was...Ch. 11 - LawnMate Company manufactures power mowers that...Ch. 11 - For each of the following independent Cases A and...Ch. 11 - Prob. 45PCh. 11 - Prob. 46PCh. 11 - WoodCrafts, Inc. is a manufacturer of furniture...Ch. 11 - Rutherford Wheel and Axle, Inc. has an automated...Ch. 11 - Chillco Corporation produces containers of frozen...Ch. 11 - Montreal Scholastic Supply Company uses a...Ch. 11 - College Memories, Inc. publishes college...Ch. 11 - While Mountain Sled Company manufactures childrens...Ch. 11 - Cleveland Computer Accessory Company (CCAC)...Ch. 11 - Prob. 54CCh. 11 - Prob. 55C
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- The variable overhead rate variance is caused by the sum between which of the following? A. actual and standard allocation base B. actual and standard overhead rates C. actual and budgeted units D. actual units and actual overhead ratesarrow_forwardThe fixed factory overhead variance is caused by the difference between which of the following? A. actual and standard allocation base B. actual and budgeted Units C. actual fixed overhead and applied fixed overhead D. actual and standard overhead ratesarrow_forwardKamen Manufacturing Co. estimates the following labor and overhead costs for the period: Required: Use the four-variance method for overhead analysis. Calculate the variances for direct labor and overhead. Prove that the overhead variances equal over- or underapplied factory overhead for the period.arrow_forward
- A. Describe the two variances between the actual costs and the standard costs for factory overhead. B. What is a factory overhead cost variance report?arrow_forwardAcme Inc. has the following information available: A. Compute the material price and quantity, and the labor rate and efficiency variances. B. Describe the possible causes for this combination of favorable and unfavorable variances.arrow_forwardThe variable overhead efficiency variance is caused by the difference between which of the following? A. actual and budgeted units B. actual and standard allocation base C. actual and standard overhead rates D. actual units and actual overhead ratesarrow_forward
- a. Analyze the factory overhead variance of Golden Manufacturers Inc., based on the given data.arrow_forwardIf a company uses predetermined rate for absorption of manufacturing overhead, the volume variance is a. The difference between budgeted cost and actual cost of fixed overhead items. b. The under- or over-applied variable cost element of overhead. c. The under- or over-applied fixed cost element of overhead. d. The difference between budgeted cost and actual cost of variable overhead items.arrow_forwardWhich of the following equations can be used to compute a labor rate variance (where AH = actual hours; SH = standard hours allowed; AR = actual rate; SR = standard rate)? Multiple Choice [SH x (AR – SR)] [AH - (AR – SR)] [AH x (AR – SR)] [SH - (AR – SR)]arrow_forward
- Under the 3 variance method for analyzing overhead, the difference between the actual factory overhead and factory overhead applied to production is the ___________ variance A. controllable B. efficiency C. net overhead D. spendingarrow_forwardIf a company uses predetermined rate for absorption of manufacturing overhead, the volume variance is O The under- or over-applied fixed cost element of overhead. O The difference between budgeted cost and actual cost of variable overhead items. O The difference between budgeted cost and actual cost of fixed overhead items. O The under- or over-applied variable cost element of overhead.arrow_forwardWhich of the following is a correct equation to calculate the fixed overhead production-volume variance? a. budgeted fixed overhead costs − fixed overhead costs allocated for actual output b. static budget amount − flexible budget amount c. actual costs incurred − fixed overhead costs allocated for actual output d. flexible budget amount − actual costs incurredarrow_forward
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What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY