How much is the labour rate variance? Electric Zero produces relay units for generators. Each relay has astandard cost of $67. Standards call for two relays per generator. InJuly, the company purchased 120 relays for $7,560. The companyused 104 relays in the production of 50 generators, with four relaysdamaged in the installation process. The standard quantity of laboris 20 hours per generator, with a standard wage rate of $24.10. InJuly, the company incurred 1,150 labor hours at a cost of $24,350.How much is the labor rate variance?

Explanation of Standard Cost:The Standard Cost is a predetermined cost that a company expects to…

Answered: Electric Zero produces relay units 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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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
Beat Company manufactures 8,000 units of a certain component per year. This component is used in the production of the main product. The following are the costs to make the component per unit: Direct materials $4 Direct labor $4 Variable overhead $3 Fixed overhead $5 If Beat Company buys the component from an outside supplier, the company can rent out the released facilities for P12,360 a year. The cost of the component per unit as quoted by the supplier is P15. 25% of fixed overhead applied in the manufacture of the component will continue regardless of what decision is made. For all purchase made by the company, freight and handling costs are applied at 2% of the purchase price. The direct materials cost presented above is exclusive of such freight and handling cost. What is the advantage or disadvantage of buying the component?A. P12,240 advantage B. 24,600 advantage C. 5,400 disadvantage D. 8,600 advantage
Regis Company makes the plugs it uses in one of its products at a cost of P36 per unit. This cost includes P8 of fixed overhead. Regis needs 30,000 of these plugs annually, and Orlan Company has offered to sell them to Regis at P33 per unit. If Regis decides to purchase the plugs, P60,000 of the annual fixed overhead will be eliminated, and the company may be able to rent the facility previously used for manufacturing the plugs. If the plugs are purchased and the facility rented, Regis Company wishes to realize P100,000 in savings annually. To achieve this goal, the minimum annual rent on the facility must be: O P10,000 O P40,000 O P70,000 O P190,000
Damon Industries manufactures 29,000 components per year. The manufacturing costs of the components was determined as follows: Direct materials $ 145,000 Direct labor 169,000 Variable manufacturing overhead 69,000 Fixed manufacturing overhead 89,000 An outside supplier has offered to sell the component for $14. If Damon purchases the component from the outside supplier, the manufacturing facilities would be unused and could be rented out for $10,900. If Damon purchases the component from the supplier instead of manufacturing it, the effect on operating profits would be a: $81,100 increase. $12,100 decrease. $33,900 increase. $55,100 decrease.
Damon Industries manufactures 16,000 components per year. The manufacturing costs of the components were determined as follows: Direct materials $ 134,000 Direct labor 21,500 Variable manufacturing overhead 61,000 Fixed manufacturing overhead 81,000 An outside supplier has offered to sell the component for $15. If Damon purchases the component from the outside supplier, the manufacturing facilities would be unused and could be rented out for $11,700. If Damon purchases the component from the supplier instead of manufacturing it, the effect on operating profits would be a:
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?
The James Company manufactures widgets that sell for $120 each. The company's unit cost for each widget is as follows: A company in another state has offered to purchase 1,000 widgets from James Company at a cost of $90 each. If James were to accept this special order, no additional Fixed Manufacturing Overhead costs would be incurred. Should James accept this special order? Show relevant calculations.
Beta makes a component used in its engine. Monthly production costs for 1,000 component units are as follows: Direct materials $46,000 Direct labor 11,500 Variable overhead costs 34,500 Fixed overhead costs 23,000 Total costs $115,000 It is estimated that 8% of the fixed overhead costs will no longer be incurred if the company purchases the component from an outside supplier. Beta has the option of purchasing the component from an outside supplier at $97.75 per unit. 22) If Beta accepts the offer from the outside supplier, the monthly avoidable costs (costs that will no longer be incurred) total 23) If Beta purchases 1,000 units from the outside supplier per month, then what would be the change in operating income?
Comet, Inc. has been experiencing the following costs when it produces 12,000 units of a subassembly: Direct materials.. .$108,000 Direct labor.... 72,000 100,000 Fixed overhead... A supplier offers to sell Comet an identical product for $18 per unit. Determine whether Comet should continue to make the product or should buy the product under each of the following conditions: (1) The fixed overhead represents the cost of insurance, taxes and depreciation on the manufacturing plant allocated to this product on the basis of the number of square feet occupied by the manufacturing operation. Comet has no alternative plans for use of this space. If Comet makes the product, it would be: (circle one) (a) $114,000 better off (b) $36,000 better off (c) $64,000 worse off (d) $60,000 better off (e) $100,000 worse off (2) The same information as part (1) with the following modification: $40,000 of the fixed costs represent the salary of a production manager who would be let go if Comet discontinues…
Clemente Inc. incurs the following costs to produce 10,000 units of a subcomponent:Direct materials $8400 Direct Labor $11,250 Variable overhead $12,600 Fixed overhead $16,200 An outside supplier has offered to sell Clemente the subcomponent for $2.85 a unit. If Clemente accepts the offer, by how much will net income increase (decrease)? $3,750 $19,950 $(8,850) $(2,850)
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…
Clemente Inc. incurs the following costs to produce 10,000 units of a subcomponent: Direct materials $8,400 Direct labor Variable overhead Fixed overhead $150. O $7,350. An outside supplier has offered to sell Clemente the subcomponent for $2.85 a unit. If Clemente accepts the offer, it could use the production capacity to produce another product that would generate additional income of $3,600. The increase (decrease) in net income from accepting the offer would be $(150). $(3,600). ~ C 11,250 An 12,600 16,200 A W P s Ö

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