E 6-2 Materials Price Variance Hogan Manufacturing Company has just adopted a standard cost system. You have been asked to analyze the materials purchases and usage for the month of August to determine the materials price variance to be recorded at the end of the month. During August, 5,000 gallons of a chemical were purchased at $3.10 per gallon. Only 4,600 STUKENT gallons were put into production. The standard price per gallon is $3.20. Compute the following variances: 4 1. The materials price variance if the chemical is carried in inventory at standard price (i.e., the price variance is accounted for at the time of purchase). 2. The materials price variance if the chemical is carried in inventory at actual price and is charged to Work-in-Process Inventory at the standard price (i.e., the price variance is accounted for at the time of use in production).

E 6-2 Materials Price Variance Hogan Manufacturing Company has just adopted a standard cost system. You have been asked to analyze the materials purchases and usage for the month of August to determine the materials price variance to be recorded at the end of the month. During August, 5,000 gallons of a chemical were purchased at $3.10 per gallon. Only 4,600 STUKENT gallons were put into production. The standard price per gallon is $3.20. Compute the following variances: 4 1. The materials price variance if the chemical is carried in inventory at standard price (i.e., the price variance is accounted for at the time of purchase). 2. The materials price variance if the chemical is carried in inventory at actual price and is charged to Work-in-Process Inventory at the standard price (i.e., the price variance is accounted for at the time of use in production).

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Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter8: Standard Costs And Variances

Section: Chapter Questions

Problem 5EB: Smith Industries uses a cost system that carries direct materials inventory at a standard cost. The...

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Sitka Industries uses a cost system that carries direct materials inventory at a standard cost. The controller has established these standards for one ladder (unit): Sitka Industries made 3,000 ladders in July and used 8,800 pounds of material to make these units. Smith Industries bought 15,500 pounds of material in the current period. There was a $250 unfavorable direct materials price variance. A. How much in total did Sitka pay for the 15,500 pounds? B. What is the direct materials quantity variance? C. What is the total direct material cost variance? D. What ii 9,500 pounds were used to make these ladders, what would be the direct materials quantity variance? E. It there was a $340 favorable direct materials price variance, how much did Sitka pay for the 15,500 pounds of material?
Use the following information to complete Brief Exercises 10-25 and 10-26: Tico Inc. produces plastic bottles. Each bottle has a standard labor requirement of 0.03 hour. During the month of April, 900,000 bottles were produced using 25,200 labor hours @ 15.00. The standard wage rate is 13.50 per hour. 10-25 Total Labor Variance Refer to the information for Tico Inc. on the previous page. Required: Calculate the total variance for production labor for the month of April.
Calculation of materials and labor variances Fritz Corp. manufactures and sells a single product. The company uses a standard cost system. The standard cost per unit of product follows: The charges to the manufacturing department for November, when 5,000 units were produced, follow: The Purchasing department normally buys about the same quantity as is used in production during a month. In November, 5,500 lb were purchased at a price of $2.90 per pound. Required: Calculate the following from standard costs for the data given, using the formulas on pages 421–422 and 424: Materials quantity variance. Materials purchase price variance (at time of purchase). Labor efficiency variance. Labor rate variance. Give some reasons as to why both the materials quantity variance and labor efficiency variance might be unfavorable.
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1. Embertson Framing's cost formula for its supplies cost is $1,350 per month plus $16 per frame. For the month of June, the company planned for activity of 816 frames, but the actual level of activity was 812 frames. The actual supplies cost for the month was $14,680. The activity variance for supplies cost in June would be closest to: a. $64 U b. $64 F c. $274 U d. $274 F 2.MARRY Manufacuting reports the following information at year end. Actual overhead applied $257,000. Flexible budget based on standard hours $309,000. Flexible budget based on actual hours $293,000 What is the amount of the efficiency variance? a. $36,000 (F) b. $16,000 (UF) c. $36,000 (UF) d. $16,000 (F) 3.Venanzi Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $40,720 per month plus $2,646 per flight plus $11 per passenger. The company expected its activity in September to be 62 flights and 288…
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