Question:68 The chief accountant reports the following information for LM Corp. Direct Materials Direct Labor Actual inputs * Standard prices $ 4,900 $ 8,000 Standard inputs allowed for actual output * $ 4,700 $ 11,000 Actual costs $ 5,000 $ 10,000 1. For Direct Materials, compute the following variances: A. Flexible budget variance B. Price variance C. Quantity variance 2. For Direct Labor, compute the following variances: A. Flexible budget variance B. Rate variance C. Efficiency variance The per-unit standards for direct labor are 2 direct labor hours at $15 per hour. If in producing 1,200 units, the actual direct labor cost was $32,000 for 2,000 direct labor hours worked, the total direct labor variance is The Refining Department of Sweet Sugar, Inc. had 79,000 tons of sugar to account for in July. Of the 79,000 tons, 49,000 tons were completed and transferred to the Boiling Department, and the remaining 30,000 tons were 50% complete. The materials required for production are added at the beginning of the process. Conversion costs are added equally throughout the refining process. Calculate the total equivalent units of production for direct materials.

Question:68 The chief accountant reports the following information for LM Corp. Direct Materials Direct Labor Actual inputs * Standard prices $ 4,900 $ 8,000 Standard inputs allowed for actual output * $ 4,700 $ 11,000 Actual costs $ 5,000 $ 10,000 1. For Direct Materials, compute the following variances: A. Flexible budget variance B. Price variance C. Quantity variance 2. For Direct Labor, compute the following variances: A. Flexible budget variance B. Rate variance C. Efficiency variance The per-unit standards for direct labor are 2 direct labor hours at $15 per hour. If in producing 1,200 units, the actual direct labor cost was $32,000 for 2,000 direct labor hours worked, the total direct labor variance is The Refining Department of Sweet Sugar, Inc. had 79,000 tons of sugar to account for in July. Of the 79,000 tons, 49,000 tons were completed and transferred to the Boiling Department, and the remaining 30,000 tons were 50% complete. The materials required for production are added at the beginning of the process. Conversion costs are added equally throughout the refining process. Calculate the total equivalent units of production for direct materials.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter9: Evaluating Variances From Standard Costs

Section: Chapter Questions

Problem 3PA: Direct materials, direct labor, and factory overhead cost variance analysis Mackinaw Inc. processes...

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Refer to the data in Exercise 9.15. Required: 1. Compute overhead variances using a two-variance analysis. 2. Compute overhead variances using a three-variance analysis. 3. Illustrate how the two- and three-variance analyses are related to the four-variance analysis. Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 120,000 units requiring 480,000 direct labor hours. (Practical capacity is 500,000 hours.) Annual budgeted overhead costs total 787,200, of which 556,800 is fixed overhead. A total of 119,400 units using 478,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were 230,600, and actual fixed overhead costs were 556,250. Required: 1. Compute the fixed overhead spending and volume variances. How would you interpret the spending variance? Discuss the possible interpretations of the volume variance. Which is most appropriate for this example? 2. Compute the variable overhead spending and efficiency variances. How is the variable overhead spending variance like the price variances of direct labor and direct materials? How is it different? How is the variable overhead efficiency variance related to the direct labor efficiency variance?
The worksheet you have developed will handle most simple variance analysis problems. Try the problem below for Pscheidl, Inc.: Actual production for October was 11,500 units. Compute the direct materials and direct labor variances for Pscheidl, Inc. Be careful when entering your input because this problem presents the information in a different format from the McGrade Industries data. Save the file as PRIMEVAR4. Print the worksheet when done.
Recompute the variances from the second Acme Inc. exercise using $0.0725 as the standard cost of the material and $14 as the standard labor cost per hour. How has your explanation of the variances changed?
Direct materials, direct labor, and factory overhead cost variance analysis Mackinaw Inc. processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 40,000 units of product were as follows: Each unit requires 0.3 hour of direct labor. Instructions Determine (A) the direct materials price variance, direct materials quantity variance, and total direct materials cost variance; (B) the direct labor rate variance, direct labor time variance, and total direct labor cost variance; and (C) the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance.
Breakaway Companys labor information for May is as follows: A. What is the actual direct labor rate per hour? B. What is the standard direct labor rate per hour? C. What was the total standard direct labor cost for May? D. What was the direct labor rate variance for May?
Direct materials and direct labor variance analysis Lenni Clothing Co. manufactures clothing in a small manufacturing facility. Manufacturing has 25 employees. Each employee presently provides 40 hours of productive labor per week. Information about a production week is as follows: Instructions Determine (A) the standard cost per unit for direct materials and direct labor; (B) the price variance, quantity variance, and total direct materials cost variance; and (C) the rate variance, time variance, and total direct labor cost variance.
At the end of the period, the factory overhead account has a credit balance of 10,000. (a) Is the total factory cost variance favorable or unfavorable? (b) Are the controllable and volume variances favorable or unfavorable?
Income statement indicating standard cost variances The following data were taken from the records of Griggs Company for December: Prepare an income statement for presentation to management.
(Appendix 10A) Which of the following is true concerning labor variances that are not material in amount? a. They are closed to Cost of Goods Sold. b. They are prorated among Work in Process, Finished Goods, and Cost of Goods Sold. c. They are prorated among Materials, Work in Process, Finished Goods, and Cost of Goods Sold. d. They are reported on the balance sheet at the end of the year. e. All of these.
Mulliner Company showed the following information for the year: Required: 1. Calculate the standard direct labor hours for actual production. 2. Calculate the applied variable overhead. 3. Calculate the total variable overhead variance.
Ribcos labor cost information for making its only product for March is as follows: A. What is the direct labor rate variance? B. What is the direct labor time variance? C. What is the total direct labor variance?
Using variance analysis and interpretation Last year, Endicott Corp. adopted a standard cost system. Labor standards were set on the basis of time studies and prevailing wage rates. Materials standards were determined from materials specifications and the prices then in effect. On June 30, the end of the current fiscal year, a partial trial balance revealed the following: Standards set at the beginning of the year have remained unchanged. All inventories are priced at standard cost. What conclusions can be drawn from each of the four variances shown in Endicotts trial balance?