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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LoneStar Co. is a manufacturing company that produces only one product, cowboy boots, has provided the following data concerning its operations in 2019 and 2020: 2019 was the company’s first year of operations. In 2019 the company produced 1,000 pairs of cowboy boots and sold 900 pairs. The company sold boots at $250 a pair. The company incurred the following costs in 2019: direct materials of $70 a pair, direct labor costs of $20 a pair, variable selling and administrative of $5 a pair, variable manufacturing overhead of $10 a pair, and fixed manufacturing overhead of $20,000. Lastly, they paid $50,000 for fixed selling and administrative expenses. In 2020, selling price and all costs remained the same except that direct material costs went up by $5 a pair. The company produced 2,000 pairs in 2020 and sold 1,500 pairs. LoneStar Co. uses FIFO inventory method (the oldest units are sold first). A. What is the unit product cost for 2019 and 2020 under variable costing? B. What is the…
Brightstone Tire and Rubber Company has capacity to produce 153,000 tires. Brightstone presently produces and sells 117,000 tires for the North American market at a price of $91 per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy 18,000 tires for $75.15 per tire. Brightstone's accounting system indicates that the total cost per tire is as follows: Direct materials $35 Direct labor 13 Factory overhead (60% variable) 21 Selling and administrative expenses (40% variable) 18 Total $87 Brightstone pays a selling commission equal to 5% of the selling price on North American orders, which is included in the variable portion of the selling and administrative expenses. However, this special order would not have a sales commission. If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $5 per tire. In addition, Euro has made the order conditional on receiving European safety…
Lally, Inc. produces universal remote controls. Lally uses a JIT costing system. One of the company's products has a standard direct materials cost of $9 per unit and a standard conversion cost of $35 per unit. During January 2018, Lally produced 500 units and sold 495 units on account at $45 each. It purchased $4,800 of direct materials on the account and incurred actual conversion costs totaling $14,000. Requiremets : 1. Prepare summary jounal entries for January. 2. The January 1, 2018, balance of the Raw and In-Process inventory account was $70. Use a T - account to find the January 31 balance. 3. Use a T - account to determine wheither conversion costs are overallocated or unerallocated for the month. By how much? Prepare the journal entry to adjust the Conversion Costs account.
Zapora Bhd manufactured smart watches. In November 2021, Zapora produced 2,200 watches with the following costs: Direct Materials $32,000 Direct Labour $13,000 Manufacturing Overheads $27,000 Additional information: There is no opening or closing stock of work-in-progress (WIP) during the month of November. Calculate Total Product Costs for 2,200 watches produced in November 2021 Select one: a. $45,000 b. $72,000 c. $32,000 d. $40,000
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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