Required1. The CEO asked you to recalculate the direct material purchase variance and the fixedoverhead volume variance, because the controller had made a mistake in calculating thevariances for November 2020. Provide the calculation and state whether the controller hadcalculated the variances correctly.2. Assume that the rest of the variances had been calculated and remarked correctly. For eachof the variances on the list above (including your correction for requirement no.1, if any):a. Provide a brief explanation of the causes of varianceb. State who is responsible for the variance3. Based on your analysis from the requirement (2) above, do you think the cost managementhas been applied successfully in the company?4. The CEO also asked you to calculate the following variances:a. Contribution margin varianceb. Contribution margin volume variancec. Market share varianced. Market size variance A Company establishes the following standards for the costs of one unit of its product. The standardproduction overhead costs per unit are bascd on direct-labor hours. Calculation for standard per unitcost is as follows:Std CostStd Qty3.00 kg| Direct MaterialDirect LaborVariable OverheadFixed Overhead*|Total*based on practical capacity of 20,000 direct-labor hour per monthStd Price/Rate$ 8.25 per kg$ 10.00 per hour$ 10.00 per hour$ 7.50 per hour24.75$20.002.00 hour$20.002.00 hour15.002.00 hour79.75During December 2020, the Company purchased 30,000 kg of direct material at a total cost of$246,000. The total wages for December were $260,000, 75% of which were for direct labor. TheCompany manufactured 9,500 units of product during December 2020, using 28,400 kg of the directmaterial purchased in December and 18,900 direct-labor hours. Actual variable and fixed overheadcost were $200,000 and $150,000, respectively. The scheduled production for the month was 10,000units.Results from sales of the product is as follows:BudgetedActualUnits Sold (in units)9,000$ 990,000$ 675,000$ 315,00042,00010,000$ 1,050,000S 750,000$ 300,00040,000SalesVariable CostContribution MarginMarket size (in units)To help the CFO in analyzing variance for the month of December 2020, the Company's controller hadprepared Variance Report on Cost as follows:VarianceValue$ 1,450 Favorable$ 900 Favorable$1,500 Favorable$ 6,090 Unfavorable$ 1,150 FavorableS 11,000 Unfavorable$ 1,000 FavorableRemarksThe direct-material price varianceThe direct-material usage varianceThe direct-material purchase price varianceThe direct-labor rate varianceThe direct-labor efficiency varianceThe Variable Overhead spending varianceThe Variable Overhead efficiency varianceThe Fixed Overhead spending varianceThe Fixed Overhead volume varianceNo VarianceS 7,500 Favorable

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Required 1. The CEO asked you to recalculate the direct material purchase variance and the fixed overhead volume variance, because the controller had made a mistake in calculating the variances for November 2020. Provide the calculation and state whether the controller had calculated the variances correctly. 2. Assume that the rest of the variances had been calculated and remarked correctly. For each of the variances on the list above (including your correction for requirement no.1, if any): a. Provide a brief explanation of the causes of variance b. State who is responsible for the variance 3. Based on your analysis from the requirement (2) above, do you think the cost management has been applied successfully in the company?

Required 1. The CEO asked you to recalculate the direct material purchase variance and the fixed overhead volume variance, because the controller had made a mistake in calculating the variances for November 2020. Provide the calculation and state whether the controller had calculated the variances correctly. 2. Assume that the rest of the variances had been calculated and remarked correctly. For each of the variances on the list above (including your correction for requirement no.1, if any): a. Provide a brief explanation of the causes of variance b. State who is responsible for the variance 3. Based on your analysis from the requirement (2) above, do you think the cost management has been applied successfully in the company?

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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Requirements Prepare a segment margin performance report for the pharmaceutical segment. In this report, be sure to include lines for the contribution margin, the segment margin, and operating income. Calculate a variance and a variance percentage for each line in the report. a. Check your spelling carefully and do not abbreviate. b. Follow the format shown in Exhibit 10-4. C. Use the ABS function when calculating variances, and use the drop-down selections for F (favorable) or U (unfavorable) when describing the variances.
Record the overhead costs, including the unfavorable volume and unfavorable controllable variances. same way as the chart above Record the direct labor costs, including the favorable efficiency variance and unfavorable rate variance. same way as the chart above
Overhead Variances and Their Disposal Warner Company has the following data for the past year: Actual overhead Applied overhead: Work-in-process inventory Finished goods inventory Cost of goods sold Total $402,000 $88,000 176,000 176,000 $440,000 Warner uses the overhead control account to accumulate both actual and applied overhead.
4. Prepare a detailed overhead variance report that shows the variances for individual items of overhead. (Indicate the effect of each variance by selecting favorable, unfavorable, or no variance.) The drop down options for the box next to "expected production volume" and the box next to"production level achieved" are: 65%, 70%, 75%, 80%, 85%, 90%, 95%, 100% of capacity the drop down options for the box next to "volume variance" are: favorable, unfavorable, no variance. The drop down option for the boxes under "variable overhead costs" are: depreciation-building, depreciation-machinery, direct labor, direct materials, indirect labor, indirect materials, maintenance, power, supervisory salaries, taxes&insurance. For the last row in variable overhead costs (the column above) "fixed over head costs" the drop down options are: contribution margin, gross profit, income from operations, total fixed overhead costs, total variable overhead costs. The drop down options for the boxes…
verify whether variances favorable of unfavorable: budgeted cost at actual volue would be 25344 (21.12*1200) and total variance to be explained is 2536 (unfavorable 27880-25344). what is the amount of variance that is attributed to the diffence between the budgeted and actual wage rate per hour. what is the amount of variance that is attributed to the change in labor productivity? what is the amount of variance that can be attributed tothe diffence between budgeted and actual volume budget actual wage rate per hour 16 17 fixed hours 320 320 variable hours per relative value unit (RVU) 1 1.1 Relative Value unite (RVUs) 1000 1200 total labor hours 1320 1640 labor cost 21120 27880 cost per RVU 21.12 23.23
The differences between actual and budgeted figures are known as type your answer... 2 Which of the following is true about unfavorable variances? Managers generally investigate only unfavorable variances as part of "management by exception." Unfavorable variances will always be negative numbers when subtracting actual figures minus budgeted figures. O Unfavorable variances should always be interpreted as “bad news" for the company. Unfavorable variances are variances that cause operating income to be lower than budgeted.
3. Compute the direct labor variance, including its rate and efficiency variances. (Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Round "Rate per hour" answers to two decimal places.) The drop down options under "actual cost" "standard cost" and the middle box for the first row are: actual rate, standard rate The drop down options for the left bottom 3 rows are: total variable overhead cost variance, variable overhead efficiency variance, variable overhead spending variance, volume variance, direct material variance, Direct labor efficiency variance, direct labor rate variance, direct materials price variance, direct materials quantity variance. the drop down options for the right yellow 3 columns are: favorable, unfavorable, no variance please use the exact format as shown in photos. Thank you !
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Which method of closing out the fixed MOH volume variance will have no effect on the financial statements, no matter the capacity used? Question options: a) Prorating the fixed MOH volume variance to FG inventory and COGS. b) Allocating the fixed MOH volume variance equally among WIP Inventory, FG inventory and COGS. c) Prorating the fixed MOH volume variance to WIP Inventory, FG inventory and COGS. d) Allocating the fixed MOH volume variance to COGS.
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