Assume that company makes only one product and uses a standard costing system. The standard cost card for that product showsstandard direct labor-hours allowed per unit of 0.50 hours. The standard direct labor pay rate is $16 per hour. While the company'sbudgeted level of production per period is 19,000 units, in a recent period, the company actually produced 19,850 units. During this periodthe company actually worked 10,500 direct labor-hours and paid its direct laborers $16.50 per hour. Based on this information, the totalincrease recorded in the Work in Process account with respect to direct labor would be:Multiple Choiceс$158,800.$172,050.$166,800.$162762€20#Nov

Businesses utilise standard costing, a cost accounting technique, to set fixed, anticipated expenses…

Answered: Assume that company makes only one…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Andretti Company has a single product called a Dak. The company normally produces and sells 86,000 Daks each year at a selling price of $62 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 9.50 Direct labor 9.00 Variable manufacturing overhead 3.20 Fixed manufacturing overhead 5.00 ($430,000 total) Variable selling expenses 4.70 Fixed selling expenses 4.00 ($344,000 total) Total cost per unit $ 35.40 A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1-a. Assume Andretti Company has sufficient capacity to produce 111,800 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 30% above the present 86,000 units each year if it increased fixed selling expenses by $130,000. What is the financial advantage (disadvantage) of investing an additional $130,000 in fixed selling expenses? 1-b.…
Acklin Company has two products: A and B. The annual production and sales of Product A is 600 units and of Product B is 900 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.5 direct labor-hours per unit and Product B requires 0.3 direct labor-hours per unit. The total estimated overhead for next period is $63,322. The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools--Activity 1, Activity 2, and General Factory--with estimated overhead costs and expected activity as follows: Activity Cost Pool Est Ovhd Cost Expected Acty - Prod A Expected Acty -Prod B Total Activity 1 $ 18,900 700 200 900 Activity 2 $ 15,631 1,000 100 1,100 General Factory $ 28,791 300 270 570 Total $ 63,322 The overhead cost per…
[The following information applies to the questions displayed below.] Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 44,000 units and sold 36,000 units at a price of $140 per unit. Manufacturing costs Direct materials per unit $ 60 Direct labor per unit $ 22 Variable overhead per unit $ 8 Fixed overhead for the year $ 528,000 Selling and administrative costs Variable selling and administrative cost per unit $ 11 Fixed selling and administrative cost per year $ 105,000 1a. Assume the company uses absorption costing. Determine its product cost per unit. 1b. Assume the company uses absorption costing. Prepare its income statement for the year under absorption costing.
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable costs per unit: Manufacturing: Direct materials $ 14 Direct labor $ 8 Variable manufacturing overhead $ 2 Variable selling and administrative $2 Fixed costs per year: Fixed manufacturing overhead $ 250,000 Fixed selling and administrative $ 160,000 During the year, the company produced 25,000 units and sold 21,000 units. The selling price of the company's product is $47 per unit. Required: Assume the company uses absorption costing: Compute the unit product cost. Prepare an income statement for the year. Assume the company uses variable costing: Compute the unit product cost. Prepare an income statement for the year.
Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 51,600 machine hours per year, which represents 25,800 units of output. Annual budgeted fixed factory overhead costs are $258,000 and the budgeted variable factory overhead cost rate is $2.50 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 19,500 units, which took 40,600 machine hours. Actual fixed factory overhead costs for the year amounted to $251,600 while the actual variable overhead cost per unit was $2.40. Assume that at the end of the year, management of Patel and Sons decides that the overhead cost variances should be allocated to WIP Inventory, Finished Goods Inventory, and Cost of Goods Sold (CGS) using the following percentages: 10%, 20%, and 70%, respectively. Provide the proper journal entry to close out the…
Regent Corp. uses a standard cost system to account for the costs of its one product. Materials standards are 3 pounds of material at $14 per pound, and labor standards are 4 hours of labor at a standard wage rate of $11. During July Regent Corp. produced 3,300 units. Materials purchased and used totaled 10,100 pounds at a total cost of $142,650. Payroll totaled $146,780 for 13,150 hours worked. a. Calculate the direct materials price variance. (Do not round your intermediate calculations. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).) Price Variance b. Calculate the direct materials quantity variance. (Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).) Quantity Variance
Can you show me how this is done? Porter Manufacturing Company uses a standard cost accounting system. In 2011, the company produced 28,000 units. Each unit took several pounds of direct materials and 2 standard hours of direct labor at a standard hourly rate of $12.00. Normal capacity was 50,000 direct labor hours. During the year, 53,965 pounds of raw materials were purchased at $1.3 per pound. All materials purchased were used during the year. If the materials price variance was $4,649 favorable, what was the standard materials price per pound? Selected Answer: 8,643 Correct Answer: 1.39 ± 0.01
Andretti Company has a single product called a Dak. The company normally produces and sells 88,000 Daks each year at a selling price of $58 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 9.50 Direct labor 8.00 Variable manufacturing overhead 2.70 Fixed manufacturing overhead 8.00 ($704,000 total) Variable selling expenses 2.70 Fixed selling expenses 3.50 ($308,000 total) Total cost per unit $ 34.40 A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1-a. Assume that Andretti Company has sufficient capacity to produce 123,200 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 40% above the present 88,000 units each year if it were willing to increase the fixed selling expenses by $150,000. What is the financial advantage (disadvantage) of investing an additional $150,000 in…
Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct material: 4 pounds at $9.00 per pound Direct labor: 3 hours at $15 per hour Variable overhead: 3 hours at $6 per hour Total standard variable cost per unit The company also established the following cost formulas for its selling expenses: Advertising Sales salaries and commissions Shipping expenses Fixed Cost per Month $36.00 45.00 18.00 $99.00 $ 210,000 $ 120,000 Direct labor cost S Variable Cost per Unit Sold The planning budget for March was based on producing and selling 26,000 units. However, during March the company actually produced and sold 31,000 units and incurred the following costs: $ 13.00 $ 4.00 a. Purchased 155,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production. b. Direct-laborers worked 56,000 hours at a rate of $16.00 per hour. c.…
Patel and Sons, Inc., uses a standard cost system to apply overhead costs to units produced. Practical capacity for the plant is defined as 53,100 machine hours per year, which represents 26,550 units of output. Annual budgeted fixed overhead costs are $265,500 and the budgeted variable overhead cost rate is $3.00 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 20,500 units, which took 42,100 machine hours. Actual fixed overhead costs for the year amounted to $259,400 while the actual variable overhead cost per unit was $2.90. Required information a. Based on the information provided above, what was the variable overhead spending variance for the year? (Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.) b. What was the variable overhead efficiency variance for the year? (Do not round intermediate calculations. Round your final answer…
Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 50,100 machine hours per year, which represents 25,050 units of output. Annual budgeted fixed factory overhead costs are $250,500 and the budgeted variable factory overhead cost rate is $2.00 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 18,500 units, which took 39,100 machine hours. Actual fixed factory overhead costs for the year amounted to $246,100 while the actual variable overhead cost per unit was $1.90. Based on the information provided above, provide the appropriate journal entries: (a) to record the overhead cost variances for the period (thereby closing out the balance in the Factory Overhead account), and (b) to close the variance accounts to the Cost of Goods Sold (CGS) account at the end of the period. (Do not round…
Javon Company set standards of 2 hours of direct labor per unit at a rate of $16.30 per hour. During October, the company actually uses 13,200 hours of direct labor at a $217,800 total cost to produce 6,900 units. In November, the company uses 17,200 hours of direct labor at a $284,660 total cost to produce 7,300 units of product.AH = Actual HoursSH = Standard HoursAR = Actual RateSR = Standard Rate(1) Compute the direct labor rate variance, the direct labor efficiency variance, and the total direct labor variance for each of these two months.(2) Javon investigates variances of more than 5% of actual direct labor cost. Which direct labor variances will the company investigate further?

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