a. Prepare a materials variance information table showing the standard price, the actual price, the standard quantity, and the actual quantity. b. Calculate the materials price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U). c. Prepare a labor variance information table showing the standard price, the actual price, the standard hours, and the actual hours. d. Calculate the labor price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U). e. Calculate the predetermined overhead rate, assuming that Walton uses the number of units as the allocation base. f. Calculate the fixed cost spending and volume variances and indicate whether they are favorable (F) or unfavorable (U). g. Determine the amount of gross margin Walton would report on the year-end income statement. D
a. Prepare a materials variance information table showing the standard price, the actual price, the standard quantity, and the actual quantity. b. Calculate the materials price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U). c. Prepare a labor variance information table showing the standard price, the actual price, the standard hours, and the actual hours. d. Calculate the labor price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U). e. Calculate the predetermined overhead rate, assuming that Walton uses the number of units as the allocation base. f. Calculate the fixed cost spending and volume variances and indicate whether they are favorable (F) or unfavorable (U). g. Determine the amount of gross margin Walton would report on the year-end income statement. D
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Topic Video
Question
Transcribed Image Text:Walton Manufacturing Company produces a component part of a top secret military communication device. Standard production and
cost data for the part, Product X, follow:
Planned production.
Per unit direct materials
Per unit direct labor
Total estimated fixed overhead costs
29,000 units
2.40 pounds@2.40 per pound
2.10 hours@$ 7.80 per hour
$ 672,800
Walton purchased and used 72,860 pounds of material at an average cost of $2.45 per pound. Labor usage amounted to 58,860
hours at an average of $7.90 per hour. Actual production amounted to 29,700 units. Actual fixed overhead costs amounted to
$707,800. The company completed and sold all inventory for $1,960,000.
Required
a. Prepare a materials variance information table showing the standard price, the actual price, the standard quantity, and the actual
quantity.
b. Calculate the materials price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U).
c. Prepare a labor variance information table showing the standard price, the actual price, the standard hours, and the actual hours.
d. Calculate the labor price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U).
e. Calculate the predetermined overhead rate, assuming that Walton uses the number of units as the allocation base.
f.
f. Calculate the fixed cost spending and volume variances and indicate whether they are favorable (F) or unfavorable (U).
g. Determine the amount of gross margin Walton would report on the year-end income statement.
Complete this question by entering your answers in the tabs below.
Required A Required B Required C Required D
Required E
Required F Required G
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education