Carol Morgan manages the production division of Walton Corporation. Ms. Morgan's responsibility report for the month of August follows: Controllable costs Raw materials Labor Maintenance Supplies Total Budget $ 18,900 9,672 3,500 2,258 $ 34,322 The budget had called for 4,500 pounds of raw materials at $4.20 per pound, and 4,500 pounds were used during August, however, the purchasing department paid $5.20 per pound for the materials. The wage rate used to establish the budget was $18.60 per hour. On August 1, however, it increased to $21.60 as the result of an inflation index provision in the union contract. Furthermore, the purchasing department did not provide the materials needed in accordance with the production schedule, which forced Ms. Morgan to use 100 hours of overtime at a $32.40 rate. The projected 520 hours of labor in the budget would have been sufficient had it not been for the 100 hours of overtime. In other words, 620 hours of labor were used in August. Actual $ 23,488 14,472 5,100 1,108 $ 44,072 Required When confronted with the unfavorable variances in her responsibility report, Ms. Morgan argued that the report was unfair because it held her accountable for materials and labor variances that she did not control. Is she correct? b. Calculate the variances of the items Ms. Morgan controlled during the period. Required B Total Complete this question by entering your answers in the tabs below. Variance $ 4,508 Unfavorable 4,880 Unfavorable 1,688 Unfavorable 1,150 Favorable $ 9,758 Unfavorable Required A Calculate the variances of the items Ms. Morgan controlled during the period. Note: Indicate the effect of each variance by selecting favorable, unfavorable, or "None" for no effect (i.e., zero variance). Variances < Required A Required B >
Carol Morgan manages the production division of Walton Corporation. Ms. Morgan's responsibility report for the month of August follows: Controllable costs Raw materials Labor Maintenance Supplies Total Budget $ 18,900 9,672 3,500 2,258 $ 34,322 The budget had called for 4,500 pounds of raw materials at $4.20 per pound, and 4,500 pounds were used during August, however, the purchasing department paid $5.20 per pound for the materials. The wage rate used to establish the budget was $18.60 per hour. On August 1, however, it increased to $21.60 as the result of an inflation index provision in the union contract. Furthermore, the purchasing department did not provide the materials needed in accordance with the production schedule, which forced Ms. Morgan to use 100 hours of overtime at a $32.40 rate. The projected 520 hours of labor in the budget would have been sufficient had it not been for the 100 hours of overtime. In other words, 620 hours of labor were used in August. Actual $ 23,488 14,472 5,100 1,108 $ 44,072 Required When confronted with the unfavorable variances in her responsibility report, Ms. Morgan argued that the report was unfair because it held her accountable for materials and labor variances that she did not control. Is she correct? b. Calculate the variances of the items Ms. Morgan controlled during the period. Required B Total Complete this question by entering your answers in the tabs below. Variance $ 4,508 Unfavorable 4,880 Unfavorable 1,688 Unfavorable 1,150 Favorable $ 9,758 Unfavorable Required A Calculate the variances of the items Ms. Morgan controlled during the period. Note: Indicate the effect of each variance by selecting favorable, unfavorable, or "None" for no effect (i.e., zero variance). Variances < Required A Required B >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Topic Video
Question
Transcribed Image Text:Carol Morgan manages the production division of Walton Corporation. Ms. Morgan's responsibility report for the month of August
follows:
Controllable costs
Raw materials
Labor
Maintenance
Supplies
Total
Required A
Budget
$ 18,900
9,672
3,500
2,250
$ 34,322
The budget had called for 4,500 pounds of raw materials at $4.20 per pound, and 4,500 pounds were used during August; however,
the purchasing department paid $5.20 per pound for the materials. The wage rate used to establish the budget was $18.60 per hour.
On August 1, however, it increased to $21.60 as the result of an inflation index provision in the union contract. Furthermore, the
purchasing department did not provide the materials needed in accordance with the production schedule, which forced Ms. Morgan to
use 100 hours of overtime at a $32.40 rate. The projected 520 hours of labor in the budget would have been sufficient had it not been
for the 100 hours of overtime. In other words, 620 hours of labor were used in August.
Required
a. When confronted with the unfavorable variances in her responsibility report, Ms. Morgan argued that the report was unfair because
it held her accountable for materials and labor variances that she did not control. Is she correct?
b. Calculate the variances of the items Ms. Morgan controlled during the period.
Complete this question by entering your answers in the tabs below.
Required B
Total
Actual
$ 23,400
14,472
5,100
1,100
$ 44,072
Variance
$4,500 Unfavorable
4,800 Unfavorable
1,600 Unfavorable
1,150 Favorable
$ 9,750 Unfavorable
Calculate the variances of the items Ms. Morgan controlled during the period.
Note: Indicate the effect of each variance by selecting favorable, unfavorable, or "None" for no effect (i.e., zero variance).
Variances
< Required A
Required B >
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