Haliburton Mills Inc. is a large producer of men's and women's clothing. The company uses standard costs for all of its products. The standard costs and actual costs for a recent period are given below for one of the company's product lines (per unit of product) Direct materials: Standard: 4.0 metres at $4.60 per metre Actual: 4.2 metres at $4.40 per metre Direct labour: Standard: 2.4 hours at $4.50 per hour Actual: 2.2 hours at $4.85 per hour Variable manufacturing overhead: Standard: 2.4 hours at $2.20 per hour Actual: 2.2 hours at $2.55 per hour Fixed manufacturing overhead: Standard: 2.4 hours at $3.80 per hour Actual: 2.2 hours at $3.85 per hour Total cost per unit Standard Cost $18.40 10.80 5.28 9.12 $43.60 Actual Cost $18.48 10.67 5.61 8.47 $43.23

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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1 b. Prepare journal entries to record all activity relating to direct materials for the period.

2. For direct labour.
a. Compute the rate and efficiency variances. (Indicate the effect of variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
 
2b . Prepare a journal entry to record the incurrence of direct labour cost for the period. (List debit entries first).  Record the incurrence of direct labour cost for the period. Note: Enter debits hefore credits
 
3. Compute the variable manufacturing overhead spending and efficiency variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
 
4. Compute the fixed overhead budget and volume variances. (indicate the effect of variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
 
5. On seeing the$1,850total cost variance, the company's president stated, "It's obvious that our costs are well under control." Do you agree?
Yes
No
 
 
 

 

 

Haliburton Mills Inc. is a large producer of men's and women's clothing. The company uses standard costs for all of its products.
The standard costs and actual costs for a recent period are given below for one of the company's product lines (per unit of
product)
Direct materials:
Standard: 4.0 metres at $4.60 per metre
Actual: 4.2 metres at $4.40 per metre
Direct labour:
Standard: 2.4 hours at $4.50 per hour
Actual: 2.2 hours at $4.85 per hour
Variable manufacturing overhead:
Standard: 2.4 hours at $2.20 per hour
Actual: 2.2 hours at $2.55 per hour
Fixed manufacturing overhead:
Standard: 2.4 hours at $3.80 per hour
Actual: 2.2 hours at $3.85 per hour!
Total cost per unit
Actual costs: 5,000 units at $43.23
Standard costs: 5,000 units at $43.60
Difference in cost-favourable
$216,150
218,000
$ 1,850
Standard
Cost
$18.40
10.80
5.28
9.12
$43.60
Actual
Cost
$18.48
10.67
5.61
8.47
$43.23
Transcribed Image Text:Haliburton Mills Inc. is a large producer of men's and women's clothing. The company uses standard costs for all of its products. The standard costs and actual costs for a recent period are given below for one of the company's product lines (per unit of product) Direct materials: Standard: 4.0 metres at $4.60 per metre Actual: 4.2 metres at $4.40 per metre Direct labour: Standard: 2.4 hours at $4.50 per hour Actual: 2.2 hours at $4.85 per hour Variable manufacturing overhead: Standard: 2.4 hours at $2.20 per hour Actual: 2.2 hours at $2.55 per hour Fixed manufacturing overhead: Standard: 2.4 hours at $3.80 per hour Actual: 2.2 hours at $3.85 per hour! Total cost per unit Actual costs: 5,000 units at $43.23 Standard costs: 5,000 units at $43.60 Difference in cost-favourable $216,150 218,000 $ 1,850 Standard Cost $18.40 10.80 5.28 9.12 $43.60 Actual Cost $18.48 10.67 5.61 8.47 $43.23
During this period, the company produced 5,000 units of product. A comparison of standard and actual costs for the period on a
total cost basis is also given above.
There was no inventory of materials on hand to start the period. During the period, 21,000 metres of materials was purchased
and used in production. The denominator level of activity for the period was 11,200 hours.
Required:
1. For direct materials:
a. Compute the price and quantity variances for the period. (Indicate the effect of each variance by selecting "F" for favourable.
"U" for unfavourable, and "None" for no effect (i.e., zero variance).)
Price variance
Quantity variance
Transcribed Image Text:During this period, the company produced 5,000 units of product. A comparison of standard and actual costs for the period on a total cost basis is also given above. There was no inventory of materials on hand to start the period. During the period, 21,000 metres of materials was purchased and used in production. The denominator level of activity for the period was 11,200 hours. Required: 1. For direct materials: a. Compute the price and quantity variances for the period. (Indicate the effect of each variance by selecting "F" for favourable. "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Price variance Quantity variance
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