Saskatewan Can Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production-engineering staff and the controller. Direct Labor: Quantity, 0.25 hour Rate, $12.50 per hour Actual material purchases amounted to 200,000 kilograms at $0.640 per kilogram. Actual costs incurred in the production of 40,000 units were as follows: Direct labor: Direct material: Direct Material: Quantity, 4 kilograms Price, $0.60 per kilogram $137,700 for 10,800 hours $108,800 for 170,000 kilograms Required: 1. Use the variance formulas to compute the direct-material price and quantity variances, the direct-material purchase price variance, and the direct-labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).) Direct-material price variance Direct-material quantity variance Direct-material purchase price variance Direct-labor rate variance Direct-labor efficiency variance (48,000) Unfavorable $ (16,000) $ 79,999 $ 120,240 $ (139,440) Unfavorable ✓ Favorable Favorable Unfavorable ››**> x
Saskatewan Can Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production-engineering staff and the controller. Direct Labor: Quantity, 0.25 hour Rate, $12.50 per hour Actual material purchases amounted to 200,000 kilograms at $0.640 per kilogram. Actual costs incurred in the production of 40,000 units were as follows: Direct labor: Direct material: Direct Material: Quantity, 4 kilograms Price, $0.60 per kilogram $137,700 for 10,800 hours $108,800 for 170,000 kilograms Required: 1. Use the variance formulas to compute the direct-material price and quantity variances, the direct-material purchase price variance, and the direct-labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).) Direct-material price variance Direct-material quantity variance Direct-material purchase price variance Direct-labor rate variance Direct-labor efficiency variance (48,000) Unfavorable $ (16,000) $ 79,999 $ 120,240 $ (139,440) Unfavorable ✓ Favorable Favorable Unfavorable ››**> x
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Saskatewan Can Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following
standards have been set by the production-engineering staff and the controller.
Direct Labor:
Quantity, 0.25 hour
Rate, $12.50 per hour
Actual material purchases amounted to 200,000 kilograms at $0.640 per kilogram. Actual costs incurred in the production of 40,000
units were as follows:
Direct labor:
Direct material:
Direct Material:
Quantity, 4 kilograms
Price, $0.60 per kilogram
$137,700 for 10,800 hours
$108,800 for 170,000 kilograms
Required:
1. Use the variance formulas to compute the direct-material price and quantity variances, the direct-material purchase price variance,
and the direct-labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable. (Indicate the effect of
each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).)
Direct-material price variance
Direct-material quantity variance
Direct-material purchase price variance
Direct-labor rate variance
Direct-labor efficiency variance
$
$
$
$
(48,000)
(16,000)
79,999x
120, 240
(139,440)
33
Unfavorable
Unfavorable
Favorable
Favorable
X
Unfavorable ✓
✓
X
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