Concept explainers
Woodpecker manufactures sawmill equipment. They use a
A. If they used 8 pounds per blade, what would be the direct materials quantity variance?
B. If they used 7.5 pounds per blade, what would be the direct materials quantity variance?
C. Compute the direct materials price variance based on 7.5 pounds of carbide per blade actually used.
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Principles of Accounting Volume 2
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Principles of Accounting Volume 1
- Sitka Industries uses a cost system that carries direct materials inventory at a standard cost. The controller has established these standards for one ladder (unit): Sitka Industries made 3,000 ladders in July and used 8,800 pounds of material to make these units. Smith Industries bought 15,500 pounds of material in the current period. There was a $250 unfavorable direct materials price variance. A. How much in total did Sitka pay for the 15,500 pounds? B. What is the direct materials quantity variance? C. What is the total direct material cost variance? D. What ii 9,500 pounds were used to make these ladders, what would be the direct materials quantity variance? E. It there was a $340 favorable direct materials price variance, how much did Sitka pay for the 15,500 pounds of material?arrow_forwardApril Industries employs a standard costing system in the manufacturing of its sole product, a park bench. They purchased 60,000 feet of raw material for $300,000, and it takes S feet of raw materials to produce one park bench. In August, the company produced 10,000 park benches. The standard cost for material output was $100,000, and there was an unfavorable direct materials quantity variance of $6,000. A. What is April Industries standard price for one unit of material? B. What was the total number of units of material used to produce the August output? C. What was the direct materials price variance for August?arrow_forwardEd Co. manufactures two types of O rings, large and small. Both rings use the same material but require different amounts. Standard materials for both are shown. At the beginning of the month, Edve Co. bought 25,000 feet of rubber for $6.875. The company made 3,000 large O rings and 4,000 small O rings. The company used 14,500 feet of rubber. A. What are the direct materials price variance, the direct materials quantity variance, and the total direct materials cost variance? B. If they bought 10,000 connectors costing $310, what would the direct materials price variance be for the connectors? C. If there was an unfavorable direct materials price variance of $125, how much did they pay per toot for the rubber?arrow_forward
- Leather Works is a family-owned maker of leather travel bags and briefcases located in the northeastern part of the United States. Foreign competition has forced its owner, Heather Gray, to explore new ways to meet the competition. One of her cousins, Wallace Hayes, who recently graduated from college with a major in accounting, told her about the use of cost variance analysis to learn about efficiencies of production. In May of last year, Heather asked Matt Jones, chief accountant, and Alfred Prudest, production manager, to implement a standard costing system. Matt and Alfred, in turn, retained Shannon Leikam, an accounting professor at Hardings College, to set up a standard costing system by using information supplied to her by Matts and Alfreds staff. To verify that the information was accurate, Shannon visited the plant and measured workers output using time and motion studies. During those visits, she was not accompanied by either Matt or Alfred, and the workers knew about Shannons schedule in advance. The cost system was implemented in June of last year. Recently, the following dialogue took place among Heather, Matt, and Alfred: HEATHER: How is the business performing? ALFRED: You know, we are producing a lot more than we used to, thanks to the contract that you helped obtain from Lean, Inc., for laptop covers. (Lean is a national supplier of computer accessories.) MATT: Thank goodness for that new product. It has kept us from sinking even more due to the inroads into our business made by those foreign suppliers of leather goods. HEATHER: What about the standard costing system? MATT: The variances are mostly favorable, except for the first few months when the supplier of leather started charging more. HEATHER: How did the union members take to the standards? ALFRED: Not bad. They grumbled a bit at first, but they have taken it in stride. Weve consistently shown favorable direct labor efficiency variances and direct materials usage variances. The direct labor rate variance has been flat. MATT: It should be since direct labor rates are negotiated by the union representative at the start of the year and remain the same for the entire year. HEATHER: Matt, would you send me the variance report for laptop covers immediately? The following chart summarizes the direct materials and direct labor variances from November of last year through April of this year (extracted from the report provided by Matt). Standards for each laptop cover are as follows: a. Three feet of direct materials at 7.50 per foot b. Forty-five minutes of direct labor at 14 per hour In addition, the data for May of this year, but not the variances for the month, are as follows: Actual direct labor cost per hour exceeded the budgeted rate by 0.10 per hour. Required: 1. For May of this year, calculate the price and quantity variances for direct labor and direct materials. 2. Discuss the trend of the direct materials and labor variances. 3. What type of actions must the workers have taken during the period they were being observed for the setting of standards? 4. What can be done to ensure that the standards are set correctly? (CMA adapted)arrow_forwardOne of the tennis rackets that Ace Sporting Goods manufactures is a titanium model (Slam) that sells for 149. The cost of each Slam consists of: Job 100 produced 100 Slams, of which six were spoiled and classified as seconds. Seconds are sold to discount stores for 50 each. Required: 1. Under the assumption that the loss from spoilage will be distributed to all jobs produced during the current period, use general journal entries to (a) record the costs of production, (b) put spoiled goods into inventory, and (c) record the cash sale of spoiled units. 2. 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The results of the study revealed the following: 3 setups1,160 each (The setups would be avoided, and total spending could be reduced by 1,160 per setup.) One half-time inspector is needed. The company already uses part-time inspectors hired through a temporary employment agency. The yearly cost of the part-time inspectors for the track assembly operation is 12,300 and could be totally avoided if the part were purchased. Engineering work: 470 hours, 45/hour. (Although the work decreases by 470 hours, the engineer assigned to the track assembly line also spends time on other products, and there would be no reduction in his salary.) 75 fewer material moves at 30 per move. Required: 1. Ignore the special study, and determine whether the track assembly should be produced internally or purchased from the supplier. 2. Now, using the special study data, repeat the analysis. 3. Discuss the qualitative factors that would affect the decision, including strategic implications. 4. 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- April Industries employs a standard costing system in the manufacturing of its sole product, a park bench. They purchased 50,000 feet of raw material for $200,000, and it takes 6 feet of raw materials to produce one park bench. In August, the company produced 11,000 park benches. The standard cost for material output was $132,000, and there was an unfavorable direct materials quantity variance of $5,000. A. What is April Industries’ standard price for one unit of material? Standard cost per unit $fill in the blank 1 B. What was the total number of units of material used to produce the August output? Actual quantity feet fill in the blank 2 Units C. What was the direct materials price variance for August? Direct materials price variance $ fill in the blank 3arrow_forwardApril Industries employs a standard costing system in the manufacturing of its sole product, a park bench. They purchased 60,000 feet of raw material for $300,000, and it takes 5 feet of raw materials to produce one park bench. In August, the company produced 10,000 park benches. The standard cost for material output was $100,000, and there was an unfavorable direct materials quantity variance of $6,000.A. What is April Industries’ standard price for one unit of material?B. What was the total number of units of material used to produce the August output?C. What was the direct materials price variance for August?arrow_forwardPirate Seafood Company purchases lobsters and processes them into tails and flakes. It sells the lobster tails for $21 per pound and the flakes for $14 per pound. On average, 100 pounds of lobster are processed into 52 pounds of tails and 22 pounds of flakes, with 26 pounds of waste. Assume that the company purchased 2,400 pounds of lobster for $4.50 per pound and processed the lobsters with an additional labor cost of $1,800. No materials or labor costs are assigned to the waste. If 1,096 pounds of tails and 324 pounds of flakes are sold, what is (1) the allocated cost of the sold items and (2) the allocated cost of the ending inventory? The company allocates joint costs on a value basis.arrow_forward
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