menu
bartleby
search
close search
Hit Return to see all results
close solutoin list

Algers Company produces dry fertilizer. At the beginning of the year, Algers had the following standard cost sheet: Algers computes its overhead rates using practical volume, which is 54,000 units. The actual results for the year are as follows: a. Units produced: 53,000 b. Direct materials purchased: 274,000 pounds at $2.50 per pound c. Direct materials used: 270,300 pounds d. Direct labor: 40,100 hours at $17.95 per hour e. Fixed overhead: $161,700 f. Variable overhead: $122,000 Required: 1. Compute price and usage variances for direct materials. 2. Compute the direct labor rate and labor efficiency variances. 3. Compute the fixed overhead spending and volume variances. Interpret the volume variance. 4. Compute the variable overhead spending and efficiency variances. 5. Prepare journal entries for the following: a. The purchase of direct materials b. The issuance of direct materials to production (Work in Process) c. The addition of direct labor to Work in Process d. The addition of overhead to Work in Process e. The incurrence of actual overhead costs f. Closing out of variances to Cost of Goods Sold

BuyFindarrow_forward

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663

Solutions

Chapter
Section
BuyFindarrow_forward

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
Chapter 9, Problem 30P
Textbook Problem
83 views

Algers Company produces dry fertilizer. At the beginning of the year, Algers had the following standard cost sheet:

Chapter 9, Problem 30P, Algers Company produces dry fertilizer. At the beginning of the year, Algers had the following

Algers computes its overhead rates using practical volume, which is 54,000 units. The actual results for the year are as follows:

  1. a. Units produced: 53,000
  2. b. Direct materials purchased: 274,000 pounds at $2.50 per pound
  3. c. Direct materials used: 270,300 pounds
  4. d. Direct labor: 40,100 hours at $17.95 per hour
  5. e. Fixed overhead: $161,700
  6. f. Variable overhead: $122,000

Required:

  1. 1. Compute price and usage variances for direct materials.
  2. 2. Compute the direct labor rate and labor efficiency variances.
  3. 3. Compute the fixed overhead spending and volume variances. Interpret the volume variance.
  4. 4. Compute the variable overhead spending and efficiency variances.
  5. 5. Prepare journal entries for the following:
    1. a. The purchase of direct materials
    2. b. The issuance of direct materials to production (Work in Process)
    3. c. The addition of direct labor to Work in Process
    4. d. The addition of overhead to Work in Process
    5. e. The incurrence of actual overhead costs
    6. f. Closing out of variances to Cost of Goods Sold

1.

To determine

Compute the direct materials price variance and the direct materials usage variance.

Explanation of Solution

Direct material price variance: The variation in between actual price and estimated price paid for materials multiplied by the actual quantity is called material price variance. It is used to determine difference in price paid for material the price that was supposed to be paid for material.

The following formula is used to calculate direct material price variance:

Direct materials price variance=[(ActualPriceStandard Price)×Actual Quantity]

Direct material usage (efficiency) variance: It is a measure that determines the variation in between actual and standard quantity of input multiplied by the standard unit price is called material usage variance.

The following formula is used to calculate direct material usage variance:

Direct materials usage variance=[(ActualQuantityStandard Quantity)×Standard Price]

Compute the direct materials price variance:

Direct materials price variance=[(ActualPriceStandard Price)×Actual Quantity]=[($2.50 per pound$2

2.

To determine

Calculate the direct labor rate variance and labor efficiency variance.

3.

To determine

Calculate the fixed overhead spending and volume variance.

4.

To determine

Calculate the variable overhead spending and efficiency variances.

5.

To determine

Prepare journal entries for the given.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Chapter 9 Solutions

Cornerstones of Cost Management (Cornerstones Series)
Show all chapter solutions
add
Ch. 9 - Explain why the variable overhead spending...Ch. 9 - What is the cause of an unfavorable volume...Ch. 9 - What are control limits, and how are they set?Ch. 9 - Explain how the two-, three-, and four-variance...Ch. 9 - Explain what mix and yield variances are.Ch. 9 - Guillermos Oil and Lube Company is a service...Ch. 9 - Direct Materials Usage Variance Refer to...Ch. 9 - Refer to Cornerstone Exercise 9.1. Guillermos Oil...Ch. 9 - Kavallia Company set a standard cost for one item...Ch. 9 - Yohan Company has the following balances in its...Ch. 9 - Standish Company manufactures consumer products...Ch. 9 - Variances Refer to Cornerstone Exercise 9.6....Ch. 9 - Standish Company manufactures consumer products...Ch. 9 - Mangia Pizza Company makes frozen pizzas that are...Ch. 9 - Mangia Pizza Company makes frozen pizzas that are...Ch. 9 - Refer to Cornerstone Exercise 9.9. Required: 1....Ch. 9 - Quincy Farms is a producer of items made from farm...Ch. 9 - During the year, Dorner Company produced 280,000...Ch. 9 - Zoller Company produces a dark chocolate candy...Ch. 9 - Oerstman, Inc., uses a standard costing system and...Ch. 9 - Refer to the data in Exercise 9.15. Required: 1....Ch. 9 - Chypre, Inc., produces a cologne mist using a...Ch. 9 - Refer to Exercise 9.17. Chypre, Inc., purchased...Ch. 9 - Delano Company uses two types of direct labor for...Ch. 9 - Jameson Company produces paper towels. The company...Ch. 9 - Madison Company uses the following rule to...Ch. 9 - Laughlin, Inc., uses a standard costing system....Ch. 9 - Responsibility for the materials price variance...Ch. 9 - Which of the following is true concerning labor...Ch. 9 - A company uses a standard costing system. At the...Ch. 9 - Relevant information for direct labor is as...Ch. 9 - Which of the following is the most likely...Ch. 9 - Haversham Corporation produces dress shirts. The...Ch. 9 - Plimpton Company produces countertop ovens....Ch. 9 - Algers Company produces dry fertilizer. At the...Ch. 9 - Misterio Company uses a standard costing system....Ch. 9 - Petrillo Company produces engine parts for large...Ch. 9 - Business Specialty, Inc., manufactures two...Ch. 9 - Vet-Pro, Inc., produces a veterinary grade...Ch. 9 - Refer to the data in Problem 9.34. Vet-Pro, Inc.,...Ch. 9 - Energy Products Company produces a gasoline...Ch. 9 - Nuevo Company produces a single product. Nuevo...Ch. 9 - Ingles Company manufactures external hard drives....Ch. 9 - As part of its cost control program, Tracer...Ch. 9 - Aspen Medical Laboratory performs comprehensive...Ch. 9 - Leather Works is a family-owned maker of leather...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions add
INTEREST RATE SENSITIVITY .An investor purchased the following 5 bonds. Each bond had a par value of 1,000 and ...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Explain interest.

Intermediate Accounting: Reporting And Analysis

What is the difference between equity capital and debt capital?

Foundations of Business (MindTap Course List)