Labor rate variance? Electric Zero produces relay units for generators. Each relay hasa standard cost of $67. Standards call for two relays pergenerator. In July, the company purchased 120 relays for$7,560. The company used 104 relays in the production of 50generators, with four relays damaged in the installationprocess. The standard quantity of labor is 20 hours pergenerator, with a standard wage rate of $23. In July, thecompany incurred 1,020 labor hours at a cost of $22,950. Howmuch is the labor rate variance?A) $460 unfavorableB) $50 favorableC) $510 favorableD) $460 favorable

Step 1: Labor rate variance occurs due to the change in labor rates from the standard labor rates.…

Answered: Electric Zero produces relay units for…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 6PA: Box Springs, Inc., makes two sizes of box springs: twin and double. The direct material for the twin...

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Box Springs. Inc., makes two sizes of box springs: queen and king. The direct material for the queen is $35 per unit and $55 is used in direct labor, while the direct material for the king is $55 per unit, and the labor cost is $70 per unit. Box Springs estimates it will make 4,300 queens and 3,000 kings in the next year. It estimates the overhead for each cost pool and cost driver activities as follows: How much does each unit cost to manufacture?
Hawkins Manufacturing Company produces connecting rods for 4- and 6-cylindcr automobile engines using the same production line. The cost required to set up the production line to produce the 4-cylinder connecting rods is 2,000, and the cost required to set up the production line for the 6-cylinder connecting rods is 3,500. Manufacturing costs are 15 for each 4-cylinder connecting rod and 18 for each 6-cylinder connecting rod. There is no production on weekends, so on Friday the line is disassembled and cleaned. On Monday, the line must be set up to run whichever product will be produced that week. Once the line has been set up, the weekly production capacities are 6,000 6-cylinder connecting rods and 8,000 4-cylinder connecting rods. Let x4 = the number of 4-cylinder connecting rods produced next week x6 = the number of 6-cylinder connecting rods produced next week s4 = 1 if the production line is set up to produce the 4-cylinder connecting rods; 0 if otherwise s6 = 1 if the production line is set up to produce the 6-cylinder connecting rods; 0 if otherwise a. Using the decision variables x4 and s4, write a constraint that sets next weeks maximum production of the 4-cylinder connecting rods to either 0 or 8,000 units. b. Using the decision variables x6 and s6, write a constraint that sets next weeks maximum production of the 6-cylinder connecting rods to either 0 or 6,000 units. c. Write a constraint that requires that production be set up for exactly one of the two rods. d. Write the cost function to be minimized.
Vollmer Manufacturing makes three components for sale to refrigeration companies. The components are processed on two machines: a shaper and a grinder. The times (in minutes) required on each machine are as follows: The shaper is available for 120 hours, and the grinder for 110 hours. No more than 200 units of component 3 can be sold, but up to 1,000 units of each of the other components can be sold. In fact, the company already has orders for 600 units of component 1 that must be satisfied. The profit contributions for components 1, 2, and 3 are 8, 6, and 9, respectively. a. Formulate and solve for the recommended production quantities. b. What are the objective coefficient ranges for the three components? Interpret these ranges for company management. c. What are the right-hand-side ranges? Interpret these ranges for company management. d. If more time could be made available on the grinder, how much would it be worth? e. If more units of component 3 can be sold by reducing the sales price by 4, should the company reduce the price?
Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 4.000 units were produced: Variable manufacturing overhead is applied at $1.00 per unit. The other $0.30 of overhead consists of allocated fixed costs. Gent will need 6,000 units of part A for the next years production. Cory Corporation has offered to supply 6,000 units of part A at a price of $7.00 per unit. It Gent accepts the offer, all of the variable costs and $1,200 of the fixed costs will be avoided. Should Gent Designs accept the offer from Cory Corporation?
Colonels uses a traditional cost system and estimates next years overhead will be $480,000, with the estimated cost driver of 240,000 direct labor hours. It manufactures three products and estimates these costs: If the labor rate is $25 per hour, what is the per-unit cost of each product?
Remarkable Enterprises requires four units of part A for every unit of Al that it produces. Currently, part A is made by Remarkable, with these per-unit costs in a month when 4,000 units were produced: Variable manufacturing overhead is applied at $1.60 per unit. The other $0.50 of overhead consists of allocated fixed costs. Remarkable will need 8,000 units of part A for the next years production. Altoona Corporation has offered to supply 8,000 units of part A at a price of $8.00 per unit. If Remarkable accepts the offer, all of the variable costs and $2,000 of the fixed costs will be avoided. Should Remarkable accept the offer from Altoona Corporation?
Electric Zero produces relay units for generators. Each relay has a standard cost of $67. Standards call for two relays per generator. In July, the company purchased 120 relays for $7,560. The company used 104 relays in the production of 50 generators, with four relays damaged in the installation process. The standard quantity of labor is 20 hours per generator, with a standard wage rate of $23. In July, the company incurred 1,020 labor hours at a cost of $22,950. How much is the labor efficiency variance? A) $460 unfavorable B) $50 favorable C) $510 favorable D) $460 favorable
Electric Zero produces relay units for generators. Each relay has a standard cost of $67. Standards call for two relays per generator. In July, the company purchased 120 relays for $7,560. The company used 104 relays in the production of 50 generators, with four relays damaged in the installation process. The standard quantity of labor is 20 hours per generator, with a standard wage rate of $24.10. In July, the company incurred 1,150 labor hours at a cost of $24,350. How much is the labor rate variance?
Vintage Audio Inc. manufactures audio speakers. Each speaker requires $96 per unit of direct materials. The speaker manufacturing assembly cell includes the following estimated costs for the period: Speaker assembly cell, estimated costs: Labor Depreciation Supplies Power Total cell costs for the period The operating plan calls for 195 operating hours for the period. Each speaker requires 12 minutes of cell process time. The unit selling price for ach speaker is $260. During the period, the following transactions occurred: 1. Purchased materials to produce 650 speaker units. 2. Applied conversion costs to production of 620 speaker units. 3. Completed and transferred 590 speaker units to finished goods. 4. Sold 565 speaker units. There were no inventories at the beginning of the period. a. Journalize the summary transactions (1)-(4) for the period. Round the per unit cost to the nearest cent and use in subsequent computations. If an amount box does not require an entry, leave it blank.…
Old Camp Company manufactures awnings for its own line of tents. The company currently is operating at capacity and received an offer from one of its suppliers to make the 11,000 awnings it needs for $20 each. Old Camp’s costs for making the awning are $7 in direct materials and $6 in direct labor. Variable manufacturing overhead is 75 percent of direct labor. If Old Camp accepts the offer, $37,000 of fixed manufacturing overhead currently being charged to the awnings will have to be absorbed by other product lines. Required: Complete the incremental analysis for the decision to make or buy the awnings in the table provided below. Should Old Camp continue to manufacture the awnings, or should it purchase the awnings from the supplier? Assuming the capacity released by purchasing the awnings allowed Old Camp to record a profit of $35,000, should Old Camp continue to manufacture or purchase the awnings?
Sierra Water Corporation uses a standard cost system for the production of its transistors. The direct labor standard for each transistor is 0.9 hours. The standard direct labor cost per hour is $7.20. During the month of July, Sierra's transistors production used 6,600 direct labor-hours at a total direct labor cost of $46,708. This resulted in production of 6,900 transistors for July. What is Sierra's labor efficiency variance for July? A. $812 Favorable B. $1,188 Unfavorable C. $1,188 Favorable D. $2,808 Unfavorable
Old Camp Company manufactures awnings for its own line of tents. The company is currently operating at capacity and has received an offer from one of its suppliers to make the 10,000 awnings it needs for $18 each. Old Camp’s costs to make the awning are $7 in direct materials and $5 in direct labor. Variable manufacturing overhead is 80 percent of direct labor. If Old Camp accepts the offer, $32,000 of fixed manufacturing overhead currently being charged to the awnings will have to be absorbed by other product lines.Required:1. Complete the incremental analysis for the decision to make or buy the awnings in the table provided below. Make Buy Net Income Increase (Decrease) Direct Materials Direct Labor Variable OH Fixed OH Purchase Price Total 2. Should Old Camp continue to manufacture the awnings or should they purchase the awnings from the supplier?3. Assuming that the capacity released by purchasing the awnings…

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