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): Standard Cost Actual Cost Direct materials: Standard: 2.0 metres at $4.50 per metre Actual: 2.4 metres at $4.25 per metre Direct labour: Standard: 2.4 hours at $3.50 per hour Actual: 2.0 hours at $3.85 per hour $ 9.00 $10.20 8.48 7.70 Variable manufacturing overhead: Standard: 2.4 hours at $3.00 per hour Actual: 2.0 hours at $3.65 per hour 7.20 7.30 Fixed manufacturing overhead: Standard: 2.4 hours at $3.90 per hour Actual: 2.0 hours at $3.95 per hour Total cost per unit 9.36 7.90 $33.96 $ 33.10 Actual costs: 4,580 units at $33.10 Standard costs: 4,500 units at $33.96 Difference in cost-favourable $148,950 152,820 $ 3,870 During this period, the company produced 4,500 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, 10,800 metres of materials was purchased and used in production. The denominator level of activity for the period was 9,540 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 varlance).) Price variance Quantity variance b. Prepare journal entries to record all activity relating to direct materials for the period. View transaction let Journal entry worksheet
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): Standard Cost Actual Cost Direct materials: Standard: 2.0 metres at $4.50 per metre Actual: 2.4 metres at $4.25 per metre Direct labour: Standard: 2.4 hours at $3.50 per hour Actual: 2.0 hours at $3.85 per hour $ 9.00 $10.20 8.48 7.70 Variable manufacturing overhead: Standard: 2.4 hours at $3.00 per hour Actual: 2.0 hours at $3.65 per hour 7.20 7.30 Fixed manufacturing overhead: Standard: 2.4 hours at $3.90 per hour Actual: 2.0 hours at $3.95 per hour Total cost per unit 9.36 7.90 $33.96 $ 33.10 Actual costs: 4,580 units at $33.10 Standard costs: 4,500 units at $33.96 Difference in cost-favourable $148,950 152,820 $ 3,870 During this period, the company produced 4,500 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, 10,800 metres of materials was purchased and used in production. The denominator level of activity for the period was 9,540 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 varlance).) Price variance Quantity variance b. Prepare journal entries to record all activity relating to direct materials for the period. View transaction let Journal entry worksheet
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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):
Standard
Cost
Actual
Cost
Direct materials:
Standard: 2.0 metres at $4.50 per metre
Actual: 2.4 metres at $4.25 per metre
Direct labour:
Standard: 2.4 hours at $3.50 per hour
Actual: 2.0 hours at $3.85 per hour
$ 9.00
$10.20
8.48
7.70
Variable manufacturing overhead:
Standard: 2.4 hours at $3.00 per hour
Actual: 2.0 hours at $3.65 per hour
7.20
7.30
Fixed manufacturing overhead:
Standard: 2.4 hours at $3.90 per hour
Actual: 2.0 hours at $3.95 per hour
Total cost per unit
9.36
7.90
$33.96
$ 33.10
Actual costs: 4,580 units at $33.10
Standard costs: 4,500 units at $33.96
Difference in cost-favourable
$148,950
152,820
$ 3,870
During this period, the company produced 4,500 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, 10,800 metres of materials was purchased and
used in production. The denominator level of activity for the period was 9,540 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 varlance).)
Price variance
Quantity variance
b. Prepare journal entries to record all activity relating to direct materials for the period.
View transaction let
Journal entry worksheet
<AB
Record the materials price variance.
Note: Enter debits before credits.
Event
General Journal
Debit
Credit
Transcribed Image Text: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 varlance).)
Labour rate variance
Labour efficiency variance
b. Prepare a journal entry to record the incurrence of direct labour cost for the period. (List debit entries first).
View transaction list
Journal entry worksheet
Record the incurrence of direct labour cost for the period.
Note: Enter debits before credits.
Event
1
General Journal
Debit
Credit
Record entry
Clear entry
View general Journal
3. Compute the variable manufacturing overhead spending and efficiency variances. (Indicate the effect of each varlance by
selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (I.e., zero variance).)
Variable overhead spending variance
Variable overhead efficiency variance
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VIEWStep 3: 1b. Preparation of journal entries to record all activity relating to direct materials:
VIEWStep 4: 2a. Computation of rate and efficiency variances:
VIEWStep 5: 2b. Preparation of journal entry to record the incurrence of direct labour cost for the period:
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