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Concept explainers
Defining the benefits of setting cost standards and calculating materials and labor variances Learning Objectives 2, 3
2. DM Eff. Var. $675 F
Murry, Inc. produced 1,000 units of the company's product in 2018. The standard quantity of direct materials was three yards of doth per unit at a
Requirements
1. What are the benefits of setting cost standards?
2. Calculate the direct materials cost variance and the direct materials efficiency variance as well as the direct labor cost and efficiency variances.
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Chapter 23 Solutions
Horngren's Accounting: The Managerial Chapters (12th Edition) (loose Leaf Version)
- Lean accounting Modern Lighting Inc. manufactures lighting fixtures, using lean manufacturing methods. Style Omega has a materials cost per unit of 16. The budgeted conversion cost for the year is 308,000 for 2,200 production hours. A unit of Style Omega requires 18 minutes of cell production time. The following transactions took place during June: 1. Materials were acquired to assemble 620 Style Omega units for June. 2. Conversion costs were applied to 620 Style Omega units of production. 3. 600 units of Style Omega were completed in June. 4. 580 units of Style Omega were sold in June for 100 per unit. A. Determine the budgeted cell conversion cost per hour. B. Determine the budgeted cell conversion cost per unit. C. Journalize the summary transactions (1)(4) for June.arrow_forwardeBook Question Content Area Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis Santiago Inc. processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 78,000 units of product were as follows: Line Item Description Standard Costs Actual Costs Direct materials 202,800 lbs. at $4.60 per lb. 200,800 lbs. at $4.40 per lb. Direct labor 19,500 hrs. at $18.60 per hr. 19,950 hrs. at $18.80 per hr. Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 20,350 direct labor hrs.: Factory overhead Variable cost, $3.60 $69,500 variable cost Factory overhead Fixed cost, $5.70 $115,995 fixed cost Each unit requires 0.25 hour of direct labor. Required: a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative…arrow_forwardeBook Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis Mackinaw Inc. processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 74,000 units of product were as follows: Standard Costs Actual Costs Direct materials 229,400 lbs. at $4.70 227,100 lbs. at $4.60 Direct labor 18,500 hrs. at $18.20 18,930 hrs. at $18.40 Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 19,310 direct labor hrs.: Variable cost, $3.30 $60,440 variable cost Fixed cost, $5.20 $100,412 fixed cost Each unit requires 0.25 hour of direct labor. Required: a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. b. Determine…arrow_forward
- Cornerstones of Cost Management 4th Ed. - Chapter 4 Scenario IV: Goodmark Company produces two types of birthday cards: scented and regular. Expected product data for the coming year are given below. Overhead costs are identified by activity. Scented Cards Regular Cards Total Units produced 20,000 200,000 - Prime costs $160,000 $1,500,000 $1,660,000 Direct labor hours 20,000 160,000 180,000 Number of setups 60 40 100 Machine hours 10,000 80,000 90,000 Inspection hours 2,000 16,000 18,000 Number of moves 180 120 300 Overhead costs: Setting up equipment $240,000 Moving materials 120,000 Machining 200,000 Inspecting products 160,000 Required: 1. Answer the following questions: a. Calculate the activity consumption ratios for Scented cards (round to two decimal places). Setups: Moving materials: Machining: Inspection: b. If only one rate based on direct labor hours were used to assign overhead, Scented Cards would receive…arrow_forwardPLEASE START FROM VII Brier Company, manufacturer of car seat covers, provided the following standard costs for its product: Standard Standard Cost Standard CostInputs Quantity ($) per Unit ($)Direct materials 7.1 pounds 5 per pound 35.50Direct labour 0.8 hours 17 per hour 13.60Variable overheads 0.8 hours 7 per hour 5.60The company reported the following in 2022 May:Original budgeted output 4 700 unitsActual output 4 500 unitsActual direct labour hours 3 610 hoursActual cost of direct labour $65 341Purchases of raw materials 36 500 poundsActual price paid for raw materials $186 150Raw materials used 34 150 poundsActual variable overhead cost $24 909Variable…arrow_forward/ My courses / ACCT2121_yasserg_fall20 / Midterm Exam One FALL2020 / Exam 1_Part 2 16 The total prime cost of a product was OMR8,400. The variable manufacturing overhead is calculated based on the number of direct labor hours. The variable manufacturing overhead cost per hour is three times the direct labor cost per hour. The fixed manufacturing overhead was OMR5,500. Assuming that direct labor hours were 700 and that the direct labor cost was 40% of direct materials cost, how much is the total manufacturing cost? ut of Select one: O a. OMR33,600 O b. OMR39,100 O c. OMR17,100 O d. OMR13,900 O e. OMR21,100 Company XYZ produced 1,000 units of product A. At this level, the variable manufacturing costs were OMR1,200,000 and the variable selling and administrative costs were OMR160,000. Furthermore, the total fixed cost was OMR190 000. Assuming the company increased the production level to 1,101 units, what would be the increase in total on 17 er savedarrow_forward
- START AT IV. Brier Company, manufacturer of car seat covers, provided the following standard costs for its product: Standard Standard Cost Standard CostInputs Quantity ($) per Unit ($)Direct materials 7.1 pounds 5 per pound 35.50Direct labour 0.8 hours 17 per hour 13.60Variable overheads 0.8 hours 7 per hour 5.60The company reported the following in 2022 May:Original budgeted output 4 700 unitsActual output 4 500 unitsActual direct labour hours 3 610 hoursActual cost of direct labour $65 341Purchases of raw materials 36 500 poundsActual price paid for raw materials $186 150Raw materials used 34 150 poundsActual variable overhead cost $24 909Variable overhead is…arrow_forwardThe standard costs and actual costs for direct materials for the manufacture of 3,000 actual units of product are Actual Material price per pound of direct material Quantity of material in pound per unit of product Actual production untis of product BDMOV (AQ SQ) for Actual Production x SP C DMCV DMPV + DMOV Actual cost per unit of product (AC) Standard costs per unit of product (SC) $8.00 Alternate formula to compute DMCV= (Actual cost-standard cost) per unit x # of units 065 3,000 Required: Compute the followings variances and indicate if they are favorable (F) or unfavorable (UF) A. Direct material Price variance (DMPV) B. Direct matenal Quantity variance (DMQV) C. Total Direct material Cost variance (DMCV) Solution: A.DMPV = (AP-SP) x AQ for Actual Production Standard Variance $ For UF ($1,462 50) F ($5,250.00) F AQ $8.75 SQ 0.45 ($6.712 50) F 1950 1350 Acronyms: AP Actual price per unit of Material SP Standard price per unit of Material AQ-Actual quantity of Material for Actual…arrow_forwardeleam.squ.euu.om/mod/qu12/attempt.p learning System (Academic) stion 3 Company XYZ uses machine hours to allocate its manufacturing overhead. The company estimates that total machine hours to be operated next year are 190,000 hours. The estimated variable overhead is $9 per hour and the estimated fixed overhead costs are $152,000. Calculate wer saved ked out of 2 the predetermined overhead rate. lag question Select one: O a. $9.80 O b. $0.80 O c. $10.80 O d. $0.10 O e. None of the answers given Clear my choicearrow_forward
- 6-XYZ Co has observed that 80% learning curve ratio applies to all labour related costs each time a new model enters production. It is anticipated that 640 units will be manufactured during 2020. Direct labour cost for the first lot of 10 units amounts to RO 14,000 at RO 14 per hour. Variable overhead cost is assigned to products at the rate of RO 3 per direct labour hour. You are required to determine average labour cost of first 80 units. a. OMR 918.54 b. OMR 1134 c. OMR 10200.6 d. None of the given optionsarrow_forwardE19-15 Computing and using single plantwide overhead allocation rate Learning Objective 1 Basic $322,000 Koehler makes handheld calculators in two models: basic and professional. Koehler estimated $721,000 of manufacturing overhead and 515,000 machine hours for the year. The basic model actually consumed 230,000 machine hours, and the professional model consumed 285,000 machine hours. Compute the predetermined overhead allocation rate using machine hours (MHr) as the allocation base. How much overhead is allocated to the basic model? To the professional model?arrow_forwardRequirement 1. Calculate the total variable costs of producing 2, 3, and 4 units assuming that Northern Defense uses an 85% incremental unit-time learning model as a basis for predicting manufacturing labor-hours. Begin by calculating the cumulative total time in labor-hours using the incremental unit-time learning model. (Round the individual unit time for Xth unit to the nearest whole number) Individual unit time for Cumulative total time: Cumulative number of units 1 2 Xth unit: Labor-hours Labor-hours 3 Data table Direct materials cost Direct manufacturing labor time for first unit Learning curve for manufacturing labor time per radar system Variable manufacturing overhead costs $ 83,000 per unit of RS-32 Direct manufacturing labor costs "Using the formula for an 85% learning curve, b= In 0.85 In 2 -0.162519 0.693147 3,900 direct manufacturing labor-hours 85% incremental unit-time" 20 per direct manufacturing labor-hour 12 per direct manufacturing labor-hour =-0.234465arrow_forward
- Essentials of Business Analytics (MindTap Course ...StatisticsISBN:9781305627734Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. AndersonPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
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