Cornerstones of Cost Management
4th Edition
ISBN: 9780357155905
Author: Don R. Hansen; Maryanne M. Mowen
Publisher: Cengage Limited
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Textbook Question
Chapter 9, Problem 7CE
Variances
Refer to Cornerstone Exercise 9.6.
Required:
- 1. Calculate the variable overhead spending variance using the formula approach. (If you compute the actual variable overhead rate, carry your computations out to five significant digits and round the variance to the nearest dollar.)
- 2. Calculate the variable overhead efficiency variance using the formula approach.
- 3. Calculate the variable overhead spending variance and variable overhead efficiency variance using the three-pronged graphical approach.
- 4. What if 26,100 direct labor hours were actually worked in February? What impact would that have had on the variable overhead spending variance? On the variable overhead efficiency variance?
Standish Company manufactures consumer products and provided the following information for the month of February:
Required:
- 1. Calculate the fixed overhead spending variance using the formula approach.
- 2. Calculate the volume variance using the formula approach.
- 3. Calculate the fixed overhead spending variance and volume variance using the three-pronged graphical approach.
- 4. What if 129,600 units had actually been produced in February? What impact would that have had on the fixed overhead spending variance? On the volume variance?
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Sharp Company manufactures a product for which the following standards have been set:
Standard Quantity Standard Price Standard
or Hours
or Rate
Cost
$5 per foot
? per hour
Direct materials
3 feet
$ 15
Direct labor
? hours
?
During March, the company purchased direct materials at a cost of $45,375, all of which were used in the production of 2,350 units of
product. In addition, 4,800 direct labor-hours were worked on the product during the month. The cost of this labor time was $50,400.
The following variances have been computed for the month:
Materials quantity variance
Labor spending variance
Labor efficiency variance
$ 2,250 U
$ 3,400 U
$ 1,000 U
Required:
1. For direct materials:
a. Compute the actual cost per foot of materials for March.
b. Compute the price variance and the spending variance.
2. For direct labor:
a. Compute the standard direct labor rate per hour.
b. Compute the standard hours allowed for the month's production.
c. Compute the standard hours allowed per unit of…
Blaze Corporation allocates overhead on the basis of DLH and the standard amount per allocation base is 2 DLH per unit.
For March, the company planned production of 10,000 units (80% of its production capacity of 12,500 units) and prepared
the following budget. The company actually operated at 90% capacity (11,250 units) in March and incurred actual total
overhead costs of $129,230.
80% Operating
Levels
Overhead Budget
Production in units
10,000
Budgeted variable overhead
Budgeted fixed overhead
$ 58,000
$ 68,000
1. Compute the standard overhead rate. Hint. Standard allocation base at 80% capacity is 20,000 DLH, computed as
10,000 units × 2.00 DLH per unit.
2. Compute the total overhead variance.
3. Compute the overhead controllable variance.
4. Compute the overhead volume variance.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
Required 4
Compute the standard overhead rate. Hint: Standard allocation base at 80% capacity is 20,000…
3. Compute the direct labor variance, including its rate and efficiency variances. (Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Round "Rate per hour" answers to two decimal places.)
The drop down options under "actual cost" "standard cost" and the middle box for the first row are: actual rate, standard rate
The drop down options for the left bottom 3 rows are: total variable overhead cost variance, variable overhead efficiency variance, variable overhead spending variance, volume variance, direct material variance, Direct labor efficiency variance, direct labor rate variance, direct materials price variance, direct materials quantity variance.
the drop down options for the right yellow 3 columns are: favorable, unfavorable, no variance
please use the exact format as shown in photos. Thank you !
Chapter 9 Solutions
Cornerstones of Cost Management
Ch. 9 - Discuss the difference between budgets and...Ch. 9 - What is the quantity decision? The pricing...Ch. 9 - Why is historical experience often a poor basis...Ch. 9 - Prob. 4DQCh. 9 - How does standard costing improve the control...Ch. 9 - The budget variance for variable production costs...Ch. 9 - Explain why the direct materials price variance is...Ch. 9 - The direct materials usage variance is always the...Ch. 9 - The direct labor rate variance is never...Ch. 9 - Prob. 10DQ
Ch. 9 - Prob. 11DQCh. 9 - What is the cause of an unfavorable volume...Ch. 9 - Prob. 13DQCh. 9 - Explain how the two-, three-, and four-variance...Ch. 9 - Prob. 15DQCh. 9 - Prob. 1CECh. 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...
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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