MANAGERIAL ACCOUNTING W/CONNECT
3rd Edition
ISBN: 9781260817553
Author: Whitecotton
Publisher: MCG
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Chapter 9, Problem 7.1GAP
To determine
Concept introduction:
Direct material variances:
Direct material variances refer to the difference between the standard direct material cost and actual direct material cost incurred. Direct material cost variances are categorized into following two categories:
- Direct material Rate variance: this variance shows the difference of standard rate and actual rate of material. The formula to calculate this variance is as follows:
- Direct material usage variance: this variance shows the difference of standard usage and actual usage of material. The formula to calculate this variance is as follows:
- Direct material cost or spending variance: this variance shows the difference of
standard cost and actual cost of material. The formula to calculate this variance is as follows:
To indicate:
The
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MANAGERIAL ACCOUNTING W/CONNECT
Ch. 9 - Briefly describe the difference between budgetary...Ch. 9 - What are standard costs? When are they set?Ch. 9 - Prob. 3QCh. 9 - Prob. 4QCh. 9 - Prob. 5QCh. 9 - Prob. 6QCh. 9 - Prob. 7QCh. 9 - Prob. 8QCh. 9 - Prob. 9QCh. 9 - How do the master budget, flexible budget, and...
Ch. 9 - Prob. 11QCh. 9 - What type of variance is calculated by comparing...Ch. 9 - Prob. 13QCh. 9 - Prob. 14QCh. 9 - Prob. 15QCh. 9 - Prob. 16QCh. 9 - Prob. 17QCh. 9 - Prob. 18QCh. 9 - What are the two variable overhead variances? What...Ch. 9 - Prob. 20QCh. 9 - Prob. 21QCh. 9 - Prob. 22QCh. 9 - Prob. 23QCh. 9 - Prob. 1MCCh. 9 - Prob. 2MCCh. 9 - Variances are always noted as favorable or...Ch. 9 - What type of budget is ail integrated set of...Ch. 9 - Prob. 5MCCh. 9 - Prob. 6MCCh. 9 - Prob. 7MCCh. 9 - Prob. 8MCCh. 9 - Prob. 9MCCh. 9 - Prob. 10MCCh. 9 - Prob. 1MECh. 9 - Creating Grading Scale Based on Ideal, Tight but...Ch. 9 - Prob. 3MECh. 9 - Prob. 4MECh. 9 - Calculating Unknown Values for Direct Labor...Ch. 9 - Prob. 6MECh. 9 - Prob. 7MECh. 9 - Prob. 8MECh. 9 - Prob. 9MECh. 9 - Prob. 10MECh. 9 - Prob. 11MECh. 9 - Prob. 12MECh. 9 - Preparing Journal Entries to Record Direct Labor...Ch. 9 - Prob. 1ECh. 9 - Prob. 2ECh. 9 - Interpreting Direct Materials Price, Quantity...Ch. 9 - Calculating Direct Materials and Direct Labor...Ch. 9 - Calculating Direct Materials and Direct Labor...Ch. 9 - Prob. 6ECh. 9 - Prob. 7ECh. 9 - Prob. 8ECh. 9 - Prob. 9ECh. 9 - Preparing Journal Entries to Record Direct...Ch. 9 - Prob. 11ECh. 9 - Calculating Fixed Manufacturing Overhead Spending,...Ch. 9 - Prob. 13ECh. 9 - Prob. 14ECh. 9 - Prob. 15ECh. 9 - Prob. 16ECh. 9 - Prob. 17ECh. 9 - Determining Actual, Standard Costs, and Variances...Ch. 9 - Prob. 1.1GAPCh. 9 - Prob. 1.2GAPCh. 9 - Prob. 1.3GAPCh. 9 - Prob. 2.1GAPCh. 9 - Prob. 2.2GAPCh. 9 - Prob. 2.3GAPCh. 9 - Prob. 3.1GAPCh. 9 - Prob. 3.2GAPCh. 9 - Prob. 3.3GAPCh. 9 - Prob. 4GAPCh. 9 - Prob. 5.1GAPCh. 9 - Prob. 5.2GAPCh. 9 - Prob. 5.3GAPCh. 9 - Prob. 6.1GAPCh. 9 - Prob. 6.2GAPCh. 9 - Prob. 6.3GAPCh. 9 - Prob. 7.1GAPCh. 9 - Prob. 7.2GAPCh. 9 - Prob. 7.3GAPCh. 9 - Preparing Journal Entries to Record Fixed...Ch. 9 - Prob. 9.1GAPCh. 9 - Prob. 9.2GAPCh. 9 - Prob. 10.1GAPCh. 9 - Prob. 10.2GAPCh. 9 - Prob. 1.1GBPCh. 9 - Prob. 1.2GBPCh. 9 - Prob. 1.3GBPCh. 9 - Prob. 2.1GBPCh. 9 - Prob. 2.2GBPCh. 9 - Prob. 2.3GBPCh. 9 - Prob. 3.1GBPCh. 9 - Prob. 3.2GBPCh. 9 - Prob. 3.3GBPCh. 9 - Prob. 4GBPCh. 9 - Prob. 5.1GBPCh. 9 - Prob. 5.2GBPCh. 9 - Prob. 5.3GBPCh. 9 - Prob. 6.1GBPCh. 9 - Prob. 6.2GBPCh. 9 - Prob. 6.3GBPCh. 9 - Prob. 7.1GBPCh. 9 - Prob. 7.2GBPCh. 9 - Prob. 7.3GBPCh. 9 - Prob. 8GBPCh. 9 - Prob. 9.1GBPCh. 9 - Prob. 9.2GBPCh. 9 - Calculating Variable Manufacturing Overhead, Fixed...Ch. 9 - Prob. 9.4GBPCh. 9 - Prob. 9.5GBPCh. 9 - Prob. 9.6GBPCh. 9 - Prob. 10.1GBPCh. 9 - Prob. 10.2GBP
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- Making journal entries Assume that during the month of April the production report of Algonquin Adhesives Inc. in E8-10 revealed the following information: Make journal entries to charge materials (use the materials purchase price variance) and labor to Work in Process. (Remember to retrieve the standard costs from E8-10 before solving this exercise.)arrow_forwardWarner Company has the following data for the past year: Warner uses the overhead control account to accumulate both actual and applied overhead. Required: 1. Calculate the overhead variance for the year and close it to cost of goods sold. 2. Assume the variance calculated is material. After prorating, close the variances to the appropriate accounts and provide the final ending balances of these accounts. 3. What if the variance is of the opposite sign calculated in Requirement 1? Provide the appropriate adjusting journal entries for Requirements 1 and 2.arrow_forwardCost and production data for Binghamton Beverages Inc. are presented as follows: Required: Calculate net variances for materials, labor, and factory overhead. Calculate specific materials and labor variances by department, using the diagram format in Figure 8-4. Comment on the possible causes for each of the variances that you computed. Make all journal entries to record production costs in Work in Process and Finished Goods. Determine the balance of ending Work in Process in each department. Assume that 4,000 units were sold at $40 each. Calculate the gross margin based on standard cost. Calculate the gross margin based on actual cost. Why does the gross margin at actual cost differ from the gross margin at standard cost. As the plant controller, you present the variance report in Item 1 above to Paul Crooke, the plant manager. After reading it, Paul states: “If we present this performance report to corporate with that large unfavorable labor variance in Blending, nobody in the plant will receive a bonus. Those standard hours of 5,500 are way too tight for this production process. Fifty-eight hundred hours would be more reasonable, and that would result in a favorable labor efficiency variance that would more than offset the unfavorable labor rate variance. Please redo the variance calculations using 5,800 hours as the standard.” You object, but Paul ends the conversation with, “That is an order.” What standards of ethical professional practice would be violated if you adhered to Paul’s order? How would you attempt to resolve this ethical conflict?arrow_forward
- Which of the following is true concerning labor variances that are not material in amount? a. They are closed to Cost of Goods Sold. b. They are prorated among Work in Process, Finished Goods, and Cost of Goods Sold. c. They are prorated among Materials, Work in Process, Finished Goods, and Cost of Goods Sold. d. They are reported as part of Overall Variance on the balance sheet at the end of the year.arrow_forward(Appendix 10A) Which of the following is true concerning labor variances that are not material in amount? a. They are closed to Cost of Goods Sold. b. They are prorated among Work in Process, Finished Goods, and Cost of Goods Sold. c. They are prorated among Materials, Work in Process, Finished Goods, and Cost of Goods Sold. d. They are reported on the balance sheet at the end of the year. e. All of these.arrow_forwardKamen Manufacturing Co. estimates the following labor and overhead costs for the period: Required: Use the four-variance method for overhead analysis. Calculate the variances for direct labor and overhead. Prove that the overhead variances equal over- or underapplied factory overhead for the period.arrow_forward
- Standard direct materials cost per unit from variance data The following data relating to direct materials cost for October of the current year are taken from the records of Good Clean Fun Inc., a manufacturer of organic toys: Determine the standard direct materials cost per unit of finished product, assuming that there was no inventory of work in process at either the beginning or the end of the month.arrow_forwardIf variances are recorded in the accounts at the time the manufacturing costs are incurred, what does a debit balance in Direct Materials Price Variance represent?arrow_forwardYohan Company has the following balances in its direct materials and direct labor variance accounts at year-end: Unadjusted Cost of Goods Sold equals 1,500,000, unadjusted Work in Process equals 236,000, and unadjusted Finished Goods equals 180,000. Required: 1. Assume that the ending balances in the variance accounts are immaterial and prepare the journal entries to close them to Cost of Goods Sold. What is the adjusted balance in Cost of Goods Sold after closing out the variances? 2. What if any ending balance in a variance account that exceeds 10,000 is considered material? Close the immaterial variance accounts to Cost of Goods Sold and prorate the material variances among Cost of Goods Sold, Work in Process, and Finished Goods on the basis of prime costs in these accounts. The prime cost in Cost of Goods Sold is 1,050,000, the prime cost in Work in Process is 165,200, and the prime cost in Finished Goods is 126,000. What are the adjusted balances in Work in Process, Finished Goods, and Cost of Goods Sold after closing out all variances? (Round ratios to four significant digits. Round journal entries to the nearest dollar.)arrow_forward
- Refer to the information for Deporte Company above. Required: 1. Prepare a journal entry for the purchase of raw materials. 2. Prepare a journal entry for the issuance of raw materials. 3. Prepare a journal entry for the addition of labor to Work in Process. 4. Prepare a journal entry for the closing of variances to Cost of Goods Sold.arrow_forwardThe fixed factory overhead variance is caused by the difference between which of the following? A. actual and standard allocation base B. actual and budgeted Units C. actual fixed overhead and applied fixed overhead D. actual and standard overhead ratesarrow_forwardA. Describe the two variances between the actual costs and the standard costs for factory overhead. B. What is a factory overhead cost variance report?arrow_forward
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What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY