ment (Basic guitar built from veneered wood.) (Bridge and strings attached; guitar tuned and inspected.) Saved Each finished guitar contains seven pounds of veneered wood. In addition, one pound of wood is typically wasted in the production process. The veneered wood used in the guitars has a standard price of $14 per pound. The other parts needed to complete each guitar, such as the bridge and strings, cost $17 per guitar. The labor standards for Springsteen" two production departments are as follows: Problem 10-47 Part 2 Construction Department: 5 hours of direct labor at $20 per hour Finishing Department: 3 hours of direct labor at $17 per hour The following pertains to the month of July. 1. There were no beginning or ending work-in-process inventories in either production department. 2. There was no beginning finished-goods inventory. 3. Actual production was 690 guitars, and 490 guitars were sold on account for $495 each. 4. The company purchased 7,900 pounds of veneered wood at a price of $14.50 per pound. 5. Actual usage of veneered wood was 6,400 pounds of the wood purchased during July. 6. Enough parts (bridges and strings) to finish 790 guitars were purchased at a cost of $9,190. 7. The Construction Department used 3,200 direct-labor hours. The total direct-labor cost in the Construction Departmen was $60,800. 8. The Finishing Department used 2,150 direct-labor hours. The total direct-labor cost in that department was $38,700. 9. There were no direct-material variances in the Finishing Department.
ment (Basic guitar built from veneered wood.) (Bridge and strings attached; guitar tuned and inspected.) Saved Each finished guitar contains seven pounds of veneered wood. In addition, one pound of wood is typically wasted in the production process. The veneered wood used in the guitars has a standard price of $14 per pound. The other parts needed to complete each guitar, such as the bridge and strings, cost $17 per guitar. The labor standards for Springsteen" two production departments are as follows: Problem 10-47 Part 2 Construction Department: 5 hours of direct labor at $20 per hour Finishing Department: 3 hours of direct labor at $17 per hour The following pertains to the month of July. 1. There were no beginning or ending work-in-process inventories in either production department. 2. There was no beginning finished-goods inventory. 3. Actual production was 690 guitars, and 490 guitars were sold on account for $495 each. 4. The company purchased 7,900 pounds of veneered wood at a price of $14.50 per pound. 5. Actual usage of veneered wood was 6,400 pounds of the wood purchased during July. 6. Enough parts (bridges and strings) to finish 790 guitars were purchased at a cost of $9,190. 7. The Construction Department used 3,200 direct-labor hours. The total direct-labor cost in the Construction Departmen was $60,800. 8. The Finishing Department used 2,150 direct-labor hours. The total direct-labor cost in that department was $38,700. 9. There were no direct-material variances in the Finishing Department.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:-1-202310-10876
gnment i
(Basic guitar built from
veneered wood.)
(Bridge and strings
attached; guitar tuned
and inspected.)
Saved
Each finished guitar contains seven pounds of veneered wood. In addition, one pound of wood is typically wasted in the
production process. The veneered wood used in the guitars has a standard price of $14 per pound. The other parts
needed to complete each guitar, such as the bridge and strings, cost $17 per guitar. The labor standards for Springsteen's
two production departments are as follows:
Construction Department: 5 hours of direct labor at $20 per hour
Finishing Department: 3 hours of direct labor at $17 per hour
The following pertains to the month of July.
1. There were no beginning or ending work-in-process inventories in either production department.
2. There was no beginning finished-goods inventory.
Problem 10-47 Part 2
3. Actual production was 690 guitars, and 490 guitars were sold on account for $495 each.
4. The company purchased 7,900 pounds of veneered wood at a price of $14.50 per pound.
5. Actual usage of veneered wood was 6,400 pounds of the wood purchased during July.
6. Enough parts (bridges and strings) to finish 790 guitars were purchased at a cost of $9,190.
7. The Construction Department used 3,200 direct-labor hours. The total direct-labor cost in the Construction Departmen
was $60,800.
8. The Finishing Department used 2,150 direct-labor hours. The total direct-labor cost in that department was $38,700.
9. There were no direct-material variances in the Finishing Department.
Transcribed Image Text:gnment i
!
Camulata thin munatian hu an
Required information
Req 2A
Req 2B
Actual Material Cost
Actual
Quantity
6,400
pounds used
Complete the table below that compute the July direct material price and quantity variance in the Construction Department. (Indicate the effect
"Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Round "Actual Price" and "Standard Price" to 2 decir
x
X
Req 2c
$ 92,800
Actual Price
$
14.50
per pound
Req 2D
Direct-material price variance
In the daha hala
Direct-Material Price and Quantity Variances
Projected Material Cost
Actual Quantity
Unfavorable
6,400
pounds used
X
X
$ 89,600
Saved
< Prev
$
Direct-material variance
Standard
Price
14.00
per pound
Unfavorable
< Req 2A
S
5 6
Standard Quantity
Unfavorable
of 6
Standard Material Cost
pounds allowed
I
Direct-material quantity variance
Req 2B >
x
Next >
X
Standard
Price
per pound
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