Variance Computations and ExplanationsOutdoor Company manufactures camping tents from a lightweight synthetic fabric. Each tent has a standard materials cost of $20, consisting of 4 yards of fabric at $5 per yard. The standards call for 2 hours of assembly at $13 per hour. The following data wererecorded for October, the first month of operations:Fabric purchasedFabric used in production of 1,700 tentsDirect labor used9,000 yards x $4.80 per yard7,000 yards3,600 hours x $13.50 per hour(a) Compute all standard cost variances for materials and labor.Materials price variance (usage basis) $Materials price variance (purchase basis) $Materials quantity variance$Labor rate variance$Labor efficiency variance$♦♦◆◆(b) Which of the following is the most likely explanation for a favorable materials price variance and an unfavorable materials quantity variance?OQuantity discounts and the use of highly skilled production employees.OLast minute purchases of raw materials from a trusted supplier to meet unexpected demand for final products.OBargain purchases of high quality materials.OPurchase of low quality materials.(c) Determine the standard variable cost of the 1,700 tents produced, separated into direct materials and labor.Direct materialsDirect laborTotal standard variable cost $

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Description: Variance Computations and ExplanationsOutdoor Company manufactures camping tents from a lightweight synthetic fabric. Each tent has a standard materials cost of $20, consisting of 4 yards of fabric at $5 per yard. The standards call for 2 hours of a

Variance analysis is the process under which the difference between the actual cost and the budgeted…

Business

Accounting

price variance (usage basis) S price variance (purchase basis) S S S S terials terials terials quantity variance or rate variance or efficiency variance 00000 Which of the following is the most likely explanation for a favorable materials price variance and an unfavorable materials quantity variance? Quantity discounts and the use of highly skilled production employees. ast minute purchases of raw materials from a trusted supplier to meet unexpected demand for final products. argain purchases of high quality materials. urchase of low quality materials. Determine the standard variable cost of the 1,700 tents produced, separated into direct materials and labor. ect materials et labor

price variance (usage basis) S price variance (purchase basis) S S S S terials terials terials quantity variance or rate variance or efficiency variance 00000 Which of the following is the most likely explanation for a favorable materials price variance and an unfavorable materials quantity variance? Quantity discounts and the use of highly skilled production employees. ast minute purchases of raw materials from a trusted supplier to meet unexpected demand for final products. argain purchases of high quality materials. urchase of low quality materials. Determine the standard variable cost of the 1,700 tents produced, separated into direct materials and labor. ect materials et labor

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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Assume a company purchased direct material at less than its normal price but it was of such poor quality that the workers struggled significantly to make it into the finished product. So to try to make up for some of the time lost, the manufacturing supervisor brought in more senior level workers from another part of the factory. Given these two situations, which of the following variances would likely occur? Multiple Choice An unfavorable material quantity variance and a favorable material price variance. A favorable material quantity variance and an unfavorable material price variance. A favorable material quantity variance and a favorable labor rate variance. A favorable labor rate variance and an unfavorable labor efficiency variance. A favorable labor efficiency variance and a favorable labor rate variance.
Material, Labor, and Variable Overhead Variances The following summarized manufacturing data relate to Steffan Corporation's April operations, during which 2,000 finished units of product were produced. Normal monthly capacity is 1,100 direct labor hours. Direct material Standard (2 lb. @ $9.50/lb.) Actual (4,200 lb. @ $10.20/lb.) Direct labor Standard (0.5 hr. @ $24/hr.) Actual (970 hrs. @ $23.40/hr.) Variable overhead Standard (0.5 hr. @ $6/hr.) Actual Total Actual cost: Split cost: Standard Units Costs $ $ $19 $12 $3 $34 Total Actual Costs $42,840 22,698 Assume that the 4,200 lb. of materials purchased were all used in producing the 2,000 completed units. Determine the materials price and efficiency variances, labor rate and efficiency variances, and variable overhead spending and efficiency variances. Materials Variances 6,200 $71,738
can you answer items #3 & #4? tysm
If a purchasing manager is able to buy direct materials required in the manufacturing of a product at a lower than ‘standard’ cost why may this result in an overall unfavorable total variance for DM’s.
Top of Form Multiple Choice Theories Choose the best answer. A cost variance of zero indicates that the manufacturing management was * able to control production cost below budgeted costs. unable to keep production costs at budgeted costs even if the purchasing department was able to keep the budgeted price. able to control production costs at budgeted costs. unable to keep production costs at budgeted costs. In gross profit analysis, a favorable cost of sales variance that includes an unfavorable cost volume variance will mean: * The production department was able to control costs within the budget but the purchasing department went over the budget. The purchasing department was able to control costs within the budget but the production department over the budget. The production and purchasing department were able to control costs within the budget. The production and purchasing departments went over the budget. Variance that arises solely because the actual units sold differs from…
Practical capacity Question options: a) will lead to an unfavorable fixed MOH volume variance if actual production does not meet planned practical capacity. b) typically leads to an unusually large, unfavorable fixed-MOH volume variance. c) will lead to an unfavorable fixed MOH volume variance if actual production exceeds planned practical capacity. d) will lead to a fixed MOH rate that will fluctuate with demand changes.
Q4 a. Do you agree from the following statements- Explain in details with examples(i) Variable costs are controllable but fixed costs are not. (ii) Sunk costs are irrelevant cost while making any decision. Q4 b. Cost Control and Cost Reduction are the two important factors by which Manufacturing companies may increase their Profits. One of the most important tool is the installation of Standard Costing system. But companies have to be very careful while deciding the Proper interpretation of variances from standard is very important for the success of standard costing system as a tool for Cost Control. Mention some important factors that must be born in your mind while interpreting variances.
Which statement is true? A. Gross profit (GP) variance analysis, is an essential part of financial statements analysis that is used to evaluate the performance of a firm's departments responsible for the firm's line activities (functions). B. Increases and decreases in sales and cost of sales have direct relationship with increases and decreases in GP. C. If there is a negative sales price variance and there is no cost variance, the gross profit variance will be equal to the sales price variance. D. A zero cost variance indicates that there is no difference between the standard cost prices and actual cost prices. E. none of the above
Question 3 An unfavorable efficiency variance for direct manufacturing labor might indicate that, there is unexpected increase in direct labor rates work is scheduled inefficiently lower-quality materials were purchased more higher-skilled workers were scheduled than planned
H1. Answer b please
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< Mastery Problem: Manufacturing Cost Variance (Actual Costs Compared to Standard Costs) Manufacturing cost variances may come from material costs that are higher or lower than expected, material usage that is not what was expected, higher or lower labor costs than expected, or more or less time spent to produce an item than expected. Overhead cost and volume variances are another cause for costs to be higher or lower than what was expected. The total manufacturing variance can be broken down by cost type (materials, labor, overhead) and further by cost variances within cost types and usage or efficiency variances within cost types: Total Manufacturing Cost Variance 7 ↑ Feedback Direct Materials Cost Variance Direct Labor Cost Variance Factory Overhead Cost Variance 7 Direct Materials Price Variance Direct Materials Quantity Variance Direct Labor Rate Variance Direct Labor Time Variance Variable Factory Overhead Controllable Variance Fixed Factory Overhead Volume Variance Manufacturing…