a.
Introduction: The material price variance is favorable when there is a cost-saving that is the actual prices are less than the standard price. The favorable variance helps in increasing the profitability of the entity. The material variances include direct material price variance and direct material quantity variance.
The direct material price variance, direct material quantity variance, direct labor price variance, and direct labor quantity variance.
b
Introduction: The applied
To calculate: The overhead variance.
c
Introduction: The income statement consists of revenues, cost of goods sold based on
To prepare: The income statement.
d
Introduction: The variance indicates the targeted cots are different from the actual costs. The variances in costs are used to determine the difference and analyze the reason for differences. The variance is used in controlling costs.
To explain: The explanation for unfavorable variance.
Want to see the full answer?
Check out a sample textbook solutionChapter 26 Solutions
ACCT.PRINCIPLES-WILEYPLUS NEXTGEN
- Hart Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies. Because the company’s customers are governmental agencies, prices are strictly regulated. Therefore, Hart Labs must constantly monitor and control its testing costs. Shown below are the standard costs for a typical test. Direct materials (2 test tubes @ $1.46 per tube) $2.92 Direct labor (1 hour @ $24 per hour) 24.00 Variable overhead (1 hour @ $6 per hour) 6.00 Fixed overhead (1 hour @ $10 per hour) 10.00 Total standard cost per test $42.92 The lab does not maintain an inventory of test tubes. As a result, the tubes purchased each month are used that month. Actual activity for the month of November 2020, when 1,475 tests were conducted, resulted in the following. Direct materials (3,050 test tubes) $4,270 Direct labor (1,550 hours) 35,650 Variable overhead 7,400 Fixed overhead 15,000 Monthly budgeted fixed overhead is…arrow_forwardPace Labs. Inc. provides mad cow disease testing for both state and federal governmental, agricultural agencies. Because the company's customers are governmental agencies, prices are strictly regulated. Therefore, Pace Labs must constantly monitor and control its testing costs. Shown below are the standard costs for a typical test. Direct materials (2 test tubes @ $1.46 per tube) $ 2.92 Direct Labor (1 hour @ $24 per hour) 24.00 Variable overhead (1 hour @ $6 per hour) 6.00 Fixed overhead (1 hour @ $10 per hour) 10.00 Total standard cost per test $42.92 The lab does not maintain an inventory of test tubes. Therefore, the tubes purchased each month are used that month. Actual activity for the month of November 2014, when 1,500 tests were conducted, resulted in the following. Direct materials (3,050 test…arrow_forwardHart Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies. Because the company's customers are governmental agencies, prices are strictly regulated. Therefore, Hart Labs must constantly monitor and control its testing costs. Shown below are the standard costs for a typical test. Direct materials (2 test tubes @ $1.00 per tube) $2.00 Direct labor (1 hour @ $32 per hour) 32.00 Variable overhead (1 hour @ $6.00 per hour) 6.00 Fixed overhead (1 hour @ $13.00 per hour) 13.00 Total standard cost per test $53.00 The lab does not maintain an inventory of test tubes. As a result, the tubes purchased each month are used that month. Actual activity for the month of November 2020, when 1,400 tests were conducted, resulted in the following. Direct materials (2,940 test tubes) $2,646 Direct labor (1,442 hours) 44,702 Variable overhead 8,512 Fixed overhead 16,968 Monthly budgeted fixed overhead is $17,030. Revenues for the month were $93,800, and…arrow_forward
- Dr. Mirwais Amiri, chairman of the Amiri Medical Complex (AMC), is concerned about the costs for tests in the hospital’s lab. Charges for lab tests are consistently higher at AMC than at other hospitals and have resulted in many complaints. Also, because of strict regulations on amounts reimbursed for lab tests, payments received from insurance companies and governmental units have not been high enough to cover lab costs. Dr. Amiri has asked you to evaluate costs in the hospital’s lab for the past month. The following information is available: Two types of tests are performed in the lab—blood tests and smears. During the past month, 1,800 blood tests and 2,400 smears were performed in the lab. Small glass plates are used in both types of tests. During the past month, the hospital purchased 12,000 plates at a cost of $28,200. 1,500 of these plates were unused at the end of the month; no plates were on hand at the beginning of the month. During the past month, 1,150 hours of labor time…arrow_forwardJohn Fleming, chief administrator for Valley View Hospital, is concerned about the costs for tests in thehospital’s lab. Charges for lab tests are consistently higher at Valley View than at other hospitals andhave resulted in many complaints. Also, because of strict regulations on amounts reimbursed for labtests, payments received from insurance companies and governmental units have not been high enoughto cover lab costs.Mr. Fleming has asked you to evaluate costs in the hospital’s lab for the past month. The followinginformation is available:a. Two types of tests are performed in the lab—blood tests and smears. During the past month, 1,800 bloodtests and 2,400 smears were performed in the lab.b. Small glass plates are used in both types of tests. During the past month, the hospital purchased12,000 plates at a cost of $28,200. This cost is net of a 6% quantity discount. 1,500 of these plateswere unused at the end of the month; no plates were on hand at the beginning of the month.c.…arrow_forwardWhat internal control or procedure(s) would provide protection against the following threats? A factory supervisor wrote off a robotic assembly machine as being sold for salvage but actually sold the machine and pocketed the proceeds. A factory supervisor accessed the production planning file and inflated the standards for work completed in his department. Consequently, future performance reports show favorable budget variances for that department. Overproduction of a slow-moving product resulted in excessive inventory that had to eventually be marked down and sold at a lossarrow_forward
- What internal control or procedure(s) would provide protection against the following threats? A factory supervisor wrote off a robotic assembly machine as being sold for salvage but actually sold the machine and pocketed the proceeds. A factory supervisor accessed the production planning file and inflated the standards for work completed in his department. Consequently, future performance reports show favorable budget variances for that department. Overproduction of a slow-moving product resulted in excessive inventory that had to eventually be marked down and sold at a loss Storeroom issues materials to production once the production is started. A production employee stole items of work-in-process inventoryarrow_forward1. Dr. Mirwais Amiri, chairman of the Amiri Medical Complex (AMC), is concerned about the costs for tests in the hospital’s lab. Charges for lab tests are consistently higher at AMC than at other hospitals and have resulted in many complaints. Also, because of strict regulations on amounts reimbursed for lab tests, payments received from insurance companies and governmental units have not been high enough to cover lab costs. Dr. Amiri has asked you to evaluate costs in the hospital’s lab for the past month. The following information is available: a. Two types of tests are performed in the lab—blood tests and smears. During the past month, 1,800 blood tests and 2,400 smears were performed in the lab. b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 12,000 plates at a cost of $28,200. 1,500 of these plates were unused at the end of the month; no plates were on hand at the beginning of the month. c. During the past month, 1,150 hours of…arrow_forwardMany companies use a quality control technique called acceptance sampling to monitor incoming shipments of parts, raw materials, and so on. In the electronics industry, component parts are commonly shipped from suppliers in large lots. Inspection of a sample of n components can be viewed as the n trials of a binomial experiment. The outcome for each component tested (trial) will be that the component is classified as good or defective. Reynolds Electronics accepts a lot from a particular supplier if the defective components in the lot do not exceed 1%. Suppose a random sample of five items from a recent shipment is tested. Assume that 1% of the shipment is defective. Compute the probability that no items in the sample are defective. Assume that 1% of the shipment is defective. Compute the probability that exactly one item in the sample is defective. What is the probability of observing one or more defective items in the sample if 1% of the shipment is defective? Would you feel comfortable accepting the shipment if one item was found to be defective? Why or why not?arrow_forward
- Price and efficiency variances, benchmarking and ethics. Sunto Scientic manufactures GPS devices for a chain of retail stores. Its most popular model, the Magellan XS, is assembled in a dedicated facility in Savannah, Georgia. Sunto is keenly aware of the competitive threat from smartphones that use Google Maps and has put in a standard cost system to manage production of the Magellan XS. It has also implemented a just-in-time system so the Savannah facility operates with no inventory of any kind. Producing the Magellan XS involves combining a navigation system (imported from Sunto’s plant in Dresden at a xed price), an LCD screen made of polarized glass, and a casing developed from specialty plastic.The budgeted and actual amounts for Magellan XS for July 2017 were as follows:arrow_forwardVariance analysis, multiple products. The Chicago Tigers play in the American Ice Hockey League. The Tigers play in the Downtown Arena, which is owned and managed by the City of Chicago. The arena has a capacity of 15,000 seats (5,500 lower-tier seats and 9,500 upper-tier seats). The arena charges the Tigers a per-ticket charge for use of its facility. All tickets are sold by the Reservation Network, which charges the Tigers a reservation fee per ticket. The Tigers’ budgeted contribution margin for each type of ticket in 2017 is computed as follows:arrow_forwardA production line operation is designed to fill cartons with laundry detergent to a mean weight of 32 ounces. A sample of cartons is periodically selected and weighed to determine whether underfilling or overfilling is occurring. If the sample data lead to a conclusion of underfilling or overfilling, the production line will be shut down and adjusted to obtain proper filling. a. Formulate the null and alternative hypotheses that will help in deciding whether to shut down and adjust the production line. b. Comment on the conclusion and the decision when H0 cannot be rejected. c. Comment on the conclusion and the decision when H0 can be rejected.arrow_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 Learning