The company where Michael works produces skateboards locally but sells them globally for $60 each. Michael is one of theproduction managers in a meeting to discuss preliminary results from the year just ended. Here is the information they had in front ofthem:WoodWheelsDirect laborActual results:●●(a)DM-WoodDM-WheelsDL$Standard Quantityper Unit$2.00 feetQuantity of wood purchased, 135,500 feet; quantity of wood used, 130,500 feet.Quantity of wheels purchased, 308,160 wheels; quantity of wheels used, 291,160 wheels.Actual cost of the wood, $3.20 per foot.Actual cost of the wheels, $0.55 per wheel.Quantity of DL hours used, 18,560 hours; actual cost of DL hours, $15.80 per hour.Actual units produced, 58,000 skateboards.Complete a variance analysis for DM (both wood and wheels) and DL, determining the price and efficiency variances for each; besure to specify the amount and sign of each variance.$5.00 wheels0.30 hoursStandard Price$3.00per foot$0.50 per wheel$14.00 per hourPrice Variance$tA$$Efficiency Variance

Direct materials variance occurs when there is a difference between the actual price paid for…

(a) Complete a variance analysis for DM (both wood and wheels) and DL, determining the price and efficiency variances for each; be sure to specify the amount and sign of each variance. DM- Wood DM- Wheels DL $ $ $ Price Variance $ +A $ $ Efficiency Variance

(a) Complete a variance analysis for DM (both wood and wheels) and DL, determining the price and efficiency variances for each; be sure to specify the amount and sign of each variance. DM- Wood DM- Wheels DL $ $ $ Price Variance $ +A $ $ Efficiency Variance

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

The company where Michael works produces skateboards locally but sells them globally for $60 each. Michael is one of the
production managers in a meeting to discuss preliminary results from the year just ended. Here is the information they had in front of
them:
Wood
Wheels
Direct labor
Actual results:
●
●
(a)
DM-
Wood
DM-
Wheels
DL
$
Standard Quantity
per Unit
$
2.00 feet
Quantity of wood purchased, 135,500 feet; quantity of wood used, 130,500 feet.
Quantity of wheels purchased, 308,160 wheels; quantity of wheels used, 291,160 wheels.
Actual cost of the wood, $3.20 per foot.
Actual cost of the wheels, $0.55 per wheel.
Quantity of DL hours used, 18,560 hours; actual cost of DL hours, $15.80 per hour.
Actual units produced, 58,000 skateboards.
Complete a variance analysis for DM (both wood and wheels) and DL, determining the price and efficiency variances for each; be
sure to specify the amount and sign of each variance.
$
5.00 wheels
0.30 hours
Standard Price
$3.00
per foot
$0.50 per wheel
$14.00 per hour
Price Variance
$
tA
$
$
Efficiency Variance

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Step 1: Introduction to direct materials and direct cost variance:

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Step 3: Calculation of DM variances for Wheels:

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Which of the following is the correct formula for the direct materials quantity variance? O a. (Actual Quantity - Actual Price) - (Standard Quantity Standard Price) O b. (Actual Quantity- Standard Quantity) * Actual Price O c. (Actual Price - Standard Price) × Actual Quantity O d. (Actual Quantity - Standard Quantity) x Standard Price
Help question 26
The variable overhead efficiency variance is computed and interpreted. a) the same as; the same as b) the same as; differently than c) differently than; the same as d) differently than; differently than the direct-cost efficiency variance.
At the beginning of the year, you estimated the following - Production - 75,000 units Raw Material - 270,000 pounds at a cost of $1,026,000 Direct Labor - 187,500 hours at a cost of $4,125,000 Variable Overhead - 135,000 machine hours at a cost of $567,000 Fixed Overhead - $900,000 At the end of year, the actual results were as follows - Production - 73,000 units Raw Material - 265,720 pounds purchased and used at a cost of $1,036,308 Direct Labor - 179,580 hours at a cost of $3,968,718 Variable Overhead - 133,590 machine hours at a cost of $558,406.20 Fixed Overhead - $891,000
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At the beginning of the year, you estimated the following - Production - 75,000 units Raw Material - 270,000 pounds at a cost of $1,026,000 Direct Labor - 187,500 hours at a cost of $4,125,000 Variable Overhead - 135,000 machine hours at a cost of $567,000 Fixed Overhead - $900,000 At the end of year, the actual results were as follows - Production - 73,000 units Raw Material - 265,720 pounds purchased and used at a cost of $1,036,308 Direct Labor - 179,580 hours at a cost of $3,968,718 Variable Overhead - 133,590 machine hours at a cost of $558,406.20 Fixed Overhead - $891,000
Which of the following underlying assumptions form(s) the basis for gross profit variance analysis? A. In multi-product organization, the sales mix remains discretionary. B. Sales and costs behave in ainear manner C. All of the choices are assumptions that underlie gross profit variance analysis D. Costs can be categorized as variable
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