Problem 10-46 Direct - Material Variances; Journal Entries (Appendix) (LO 10-1, 10-3, 10-9) Rocky Mountain Camping Equipment, Inc., has established the following direct - material standards for its two products. Standard Quantity Standard Price Standard camping tent 27 yards $ 12.50 per yard Deluxe backpacking tent 22 yards $ 8.80 per yard During March, the company purchased 4, 100 yards of tent fabric for its standard model at a cost of $ 53,710. The actual March production of the standard tent was 110 tents, and 3,100 yards of fabric were used. Also during March, the company purchased 1,100 yards of the same tent fabric for its deluxe backpacking tent at a cost of $ 9,570. The firm used 4, 180 yards of the fabric during March in the production of 190 deluxe tents. Required: 1. Compute the direct - material purchase price variance and quantity variance for March. 2. Prepare journal entries to record the purchase of material, use of material, and incurrence of variances in March.
Problem 10-46 Direct - Material Variances; Journal Entries (Appendix) (LO 10-1, 10-3, 10-9) Rocky Mountain Camping Equipment, Inc., has established the following direct - material standards for its two products. Standard Quantity Standard Price Standard camping tent 27 yards $ 12.50 per yard Deluxe backpacking tent 22 yards $ 8.80 per yard During March, the company purchased 4, 100 yards of tent fabric for its standard model at a cost of $ 53,710. The actual March production of the standard tent was 110 tents, and 3,100 yards of fabric were used. Also during March, the company purchased 1,100 yards of the same tent fabric for its deluxe backpacking tent at a cost of $ 9,570. The firm used 4, 180 yards of the fabric during March in the production of 190 deluxe tents. Required: 1. Compute the direct - material purchase price variance and quantity variance for March. 2. Prepare journal entries to record the purchase of material, use of material, and incurrence of variances in March.
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:Problem 10-46 Direct - Material Variances; Journal Entries (Appendix) (LO
10-1, 10-3, 10-9) Rocky Mountain Camping Equipment, Inc., has established
the following direct - material standards for its two products. Standard Quantity
Standard Price Standard camping tent 27 yards $ 12.50 per yard Deluxe
backpacking tent 22 yards $ 8.80 per yard During March, the company
purchased 4, 100 yards of tent fabric for its standard model at a cost of $
53,710. The actual March production of the standard tent was 110 tents, and
3,100 yards of fabric were used. Also during March, the company purchased
1,100 yards of the same tent fabric for its deluxe backpacking tent at a cost of $
9,570. The firm used 4, 180 yards of the fabric during March in the production
of 190 deluxe tents. Required: 1. Compute the direct - material purchase price
variance and quantity variance for March. 2. Prepare journal entries to record
the purchase of material, use of material, and incurrence of variances in March.
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