Direct materials and manufacturing labor variances, solving unknowns. (CPA, adapted) On May 1, 2017, Bovar Company began the manufacture of a new paging machine known as Dandy. The company installed a
Direct materials (3 lb. at $4 per lb.) | $12.00 |
Direct manufacturing labor (1/2 hour at $20 per hour) | 10.00 |
Manufacturing overhead (75% of direct manufacturing labor costs) | 7.50 |
$29.50 |
The following data were obtained from Bovar’s records for the month of May:
Debit | Credit | |
Revenues | $125,000 | |
Accounts payable control (for May’s purchases of direct materials) | 55,000 | |
Direct materials price variance | $3,500 | |
Direct materials efficiency variance | 2,400 | |
Direct manufacturing labor price variance | 1,890 | |
Direct manufacturing labor efficiency variance | 2,200 |
Actual production in May was 4,000 units of Dandy, and actual sales in May were 2,500 units.
The amount shown for direct materials price variance applies to materials purchased during May. There was no beginning inventory of materials on May 1, 2017 no beginning inventory of materials on May 1, 2017.
Compute each of the following items for Bovar for the month of May. Show your computations.
- 1. Standard direct manufacturing labor-hours allowed for actual output produced
Required
- 2. Actual direct manufacturing labor-hours worked
- 3. Actual direct manufacturing labor wage rate
- 4. Standard quantity of direct materials allowed (in pounds)
- 5. Actual quantity of direct materials used (in pounds)
- 6. Actual quantity of direct materials purchased (in pounds)
- 7. Actual direct materials price per pound
Want to see the full answer?
Check out a sample textbook solutionChapter 7 Solutions
Horngren's Cost Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText - Access Card Package (16th Edition)
- During the week of August 21, Parley Manufacturing produced and shipped 4,000 units of its machine tools: 1,500 units of Tool SK1 and 2,500 units of Tool SK3. The cycle time for SK1 is 0.73 hour, and the cycle time for SK3 is 0.56 hour. The following costs were incurred: Required: 1. Assume that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost, and comment on its accuracy. 2. Assume that Tool SK1 is responsible for 60% of the materials cost. Calculate the unit cost for Tool SK 1 and Tool SK3, and comment on its accuracy. Explain the rationale for using units shipped instead of units produced in the calculation. 3. Calculate the unit cost for the two models, using DBC. Explain when and why this cost is more accurate than the unit cost calculated in Requirement 2.arrow_forwardQuality Fender uses a standard cost system and provide the following information: 1(Click the icon to view the information.) Quality Fender allocates manufacturing overhead to production based on standard direct labor hours. Quality Fender reported the following actual results for 2024: actual number of fenders produced, 20,000; actual variable overhead, $4,610; actual fixed overhead, $24,000; actual direct labor hours, 360. Read the requirements2. Requirement 1. Compute the overhead variances for the year: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance. Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identify whether each variance is favorable (F) or unfavorable (U).(You may need to simply the formula based on the data provided. Abbreviations used:…arrow_forwardFor a simple regression analysis model that is used to allocate factory overhead, an internal auditor finds that the intersection of the line of best fit for the overhead allocation with the y-axis is $14,000. The slope of the line is 0.2. The independent variable, factory wages, amounts to $810,000 for the month. What is the estimated amount of factory overhead to be allocated for the month? Multiple Choice $289,400. $162.000. $68,000. $88,000.arrow_forward
- Horace Company manufactures a professional-grade vacuum cleaner and began operations in 2017. For 2017, Horace budgeted to produce and sell 25,000 units. The company had no price, spending, or efficiency variances and writes off production-volume variance to cost of goods sold. Actual data for 2017 are given in attatched picture: Q.Prepare a 2017 income statement for Horace Company using absorption costingarrow_forwardW Corporation assembles handheld computers. Each handheld computer takes six hours to assemble. The following data are for August 2018: Direct materials purchased $2,650,000 Conversion costs incurred $450,000 Direct materials used $2,500,000 Conversion costs allocated $500,000 W records direct materials purchased and conversion costs incurred at actual costs. It has no direct materials variances. When finished goods are sold, the backflush costing system “pulls through” standard direct material cost ($100 per unit) and standard conversion cost ($20 per unit). W produced 25,000 finished units in August 2018 and sold 24,500 units. The actual direct material cost per unit in August 2018 was $100, and the actual conversion cost per unit was $19. Required 1- Assume W uses a JIT production system and a backflush costing system with three trigger points: _ Purchase of direct materials and incurring of conversion costs _ Completion of good finished units of product _ Sale of finished…arrow_forwardUse this information to answer the question that follow.The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows: Standard Costs Fixed overhead (based on 10,000 hours) 3 hours per unit @ $0.80 per hour Variable overhead 3 hours per unit @ $2.00 per hour Actual Costs Total variable cost, $18,000 Total fixed cost, $8,000 The total factory overhead cost variance is a.$2,500 unfavorable b.$2,000 favorable c.$5,000 favorable d.$5,000 unfavorablearrow_forward
- Ma1. Quality Inc. uses a standard cost system and provides the following information. Quality allocates manufacturing overhead to production based on standard direct labor hours. Quality reported the following actual results for 2018: The actual number of units produced is 1,000. The actual variable overhead is $2,500. The actual fixed overhead is $3,500. The actual direct labor hours are 1,200. Data Static budget variable overhead $1,200 Static budget fixed overhead $1,600 Static budget direct labor hour $800 Static budget number of units 400 units. Static direct labor hours 2 hours per unit. Compute the variable overhead cost and efficiency variances and fixed overhead cost and volume variances. 1)-Variable overhead cost variance = Actual hours x (Actual rate – Standard rate) 2)-Variable overhead efficiency variances = Standard rate x (Actual labor hours – Standard labor*hours for actual production). 3)-Fixed overhead cost variances = Actual fixed overhead – Budgeted fixed overhead…arrow_forwardDunn, Inc., is a privately held furniture manufacturer. For August 2018, Dunn had the following standards for one of its products, a wicker chair: Standards per Chair Direct materials 2 square yards of input at $5 per square yard Direct manufacturing labor 0.5 hour of input at $10 per hour The following data were compiled regarding actual performance: actual output units (chairs) produced, 2,000; square yards of input purchased and used, 3,700; price per square yard, $5.10; direct manufacturing labor costs, $8,820; actual hours of input, 900; labor price per hour, $9.80. REQUIREMENTS: 1. Show computations of price and efficiency…arrow_forwardSub : Accounting Please answer all questions. Please type the solution. Thank You 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 195,000 lbs. at $5.50 per lb. 193,100 lbs. at $5.40 per lb. Direct labor 19,500 hrs. at $16.80 per hr. 19,950 hrs. at $17.10 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, $2.90 $55,980 variable cost Factory overhead Fixed cost, $4.60 $93,610 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…arrow_forward
- Recording manufacturing costs in a JIT costing system Lancer, Inc. produces universal remote controls. Lancer uses a JIT costing system. One of the company's products has a standard direct materials cost of $9 per unit and a standard conversion cost of $35 per unit. During January 2021, Lancer produced 600 units and sold 595 units on account at $55 each. It purchased $6,300 of direct materials on account and incurred actual conversion costs totaling $17,500. Requirements 1. Prepare summary journal entries for January. 2. The January 1, 2021, balance of the Raw and In-Process Inventory account was $50. Use a T-account to find the January 31 balance. 3. Use a T-account to determine whether conversion costs are overallocated or underallocated for the month. By how much? Prepare the journal entry to adjust the Conversion Costs account.arrow_forwardTerrell Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. Inputs Variable manufacturing overhead O $46 U $2.30 per hour The company has reported the following actual results for the product for July: Actual output Actual direct labor-hours Actual variable overhead rate S 2.10 per hour Actual variable overhead cost $ 4,998 The variable overhead efficiency variance for the month is closest to: $42 F Standard Quantity or Hours per Unit of Output O $46 F O $42 U Standard Price or Rate 0.30 hours 8,000 units 2,380 hoursarrow_forwardDeluxe, Inc. uses a standard cost system and provides the following information. Static budget variable overhead $2,100 Static budget fixed overhead $2,800 Static budget direct labor hours 1,400 hours Static budget number of units 700 units Standard direct labor hours 2 hours per unit Deluxe allocates manufacturing overhead to production based on standard direct labor hours. Deluxe reported the following actual results for 2018: actual number of units produced, 1,000; actual variable overhead, $5,000; actual fixed overhead, $3,500; actual direct labor hours, 1,900. 1. Compute the variable overhead cost and efficiency variances and fixed overhead cost and volume variances. 2. Explain why the variances are favorable or unfavorable. Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identify whether each variance is…arrow_forward
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning