EFG Ltd. produces plastic chairs for kindergarten. EFG uses a standard cost system. During January2023, EFG used 11, 220 plates for manufacturing, costing $42, 636. EFG paid direct labor costs $157,794 for 8,670 hours of direct labor. The standard cost per chair assumes 1.0 plate per chair at $4per plate, and 0.8 hours of direct labor per chair at $20 per hour. The budgeted quantity of products forJanuary 2023 were 10,000 chairs, while the actual quantity was 10,200. a. Calculate the price varianceand quantity variance relating to direct materials used in the manufacture of chairs in January 2023 b.Calculate the wage rate variance and direct labor efficiency for January 2023 c. Assume that EFGspecifies 7% of budgets as the thresholds for variances, identify which adverse variances calculated areabove the threshold and should be analyzed? Specify possible causes and recommend correctiveactions for improvement?

Variance analysis is a systematic approach used by organizations to compare actual financial results…

Answered: EFG Ltd. produces plastic chairs for…

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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Rubble, Inc. produced 1,100 backpacks, the company's product in 2020. The standard cost was 4 yards of cloth at a standard cost of $0.90 per yard. The accounting records show that 2,700 yards of cloth were used, and the company paid $1.15 per yard. Standard time to make the backpacks was 2 direct labor hours per unit at a standard rate of $9.80 per direct labor hours. Employees worked a total of 1,500 hours and were paid $9.15 per hour.Calculate the direct labor cost variance.
TikTok Electronics manufactures an aluminium fibre tripod model “TRI-X” which sells for $1,600. The production cost computed per unit under traditional costing for each model in 2019 was as follows:Traditional CostingTRIXDirect Materials$700Direct Labour ($20/hour)$120Manufacturing overhead ($38 per DLH)$228Total per unit cost$1, 048In 2019, TikTok Electronics manufactured 26,000 units of TRI-X. Under traditional costing, the gross profit on TRI-X was $552 ($1,600-$1,048). Management is considering phasing out TRI-X as it has continuously failed to reach the gross profit target of $600. Before finalizing its decision, management asks TikTok Electronics management accountant to prepare an3analysis using activity-based costing (ABC). The management accountant accumulates the following information about overhead for the year ended December 31, 2019.Activity Cost PoolsCost DriversEstimated OverheadExpected Use of Cost DriversPurchasingNumber of orders$1,200,00040,000Machine setupsNumber of…
Rubble, Inc. produced 1,000 backpacks, the company's product in 2020. The standard cost was 3 yards of cloth at a standard cost of $1.00 per yard. The accounting records show that 2,900 yards of cloth were used, and the company paid $1.05 per yard. Standard time to make the backpacks was 2 direct labor hours per unit at a standard rate of $9.75 per direct labor hours. Employees worked a total of 1,800 hours and were paid $9.25 per hour.1. Calculate the direct materials cost variance and the direct materials efficiency variance.
TikTokElectronics manufactures an aluminium fibre tripod model“TRI-X” which sells for $1,600.The production cost computed per unit under traditional costing for each model in 2019was as follows: Traditional Costing TRIX Direct Materials $700 Direct Labour($20/hour) $120 Manufacturing overhead($38 per DLH) $228 Total per unit cost $1,048 In 2019, TikTokElectronics manufactured 26,000units of TRI-X. Under traditional costing, the gross profit on TRI-X was $552 ($1,600-$1,048). Management is considering phasing out TRI-X as it has continuously failed to reach the gross profit target of $600. Before finalizing its decision, management asks TikTokElectronics management accountant to prepare an analysis using activity-based costing (ABC). The management accountant accumulates the following information…

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