The director of cost management for Odessa Company uses a statistical control chart to help management determine when toinvestigate variances. The critical value is 1 standard deviation. The company incurred the following direct-labor efficiency variancesduring the first six months of the current year.JanuaryFebruaryMarchAprilMayJune$ 300 F850 U750 U950 U1,100 U1,480 UThe standard direct-labor cost during each of these months was $24,000. The controller has estimated that the firm's monthly direct-labor variances have a standard deviation of $1,000.Required:2-a. Determine the cutoff value for investigation if the controller's rule of thumb is to investigate all variances equal to or greater than 6percent of standard cost.2-b. Based on the cutoff value, which month will have its direct-labor efficiency variance investigated?Complete this question by entering your answers in the tabs below.Req 2AReg 2BDetermine the cutoff value for investigation if the controller's rule of thumb is to investigate all variances equal to or greaterthan 6 percent of standard cost.Cutoff value1,350< Prev2 of 3Next >MacBook Pro"1350"9689M.0OPH.CN

The question is based on the concept of Cost Accounting.

Answered: The director of cost management for…

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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Metcalf Manufacturing Company has established direct labor standards of 1.0 hour at $15.25 per hour for a product it makes. During December, the company made 5,500 units of that product. Direct labor used was 5,400 hours, and workers were paid $16.25 per hour. Which of the following is true? The labor efficiency variance is $5,400 favorable. The labor efficiency variance is $5,400 unfavorable. The labor efficiency variance is $1,525 favorable. The labor efficiency variance is $1,525 unfavorable.
Frame It Up Inc manufactures picture frames. During the recent month, the company manufactured 1,510 picture frames using 479 direct labor hours. The company paid the direct labor workers a total of $10,000 for the month. Standards per picture frame for Frame It Up required 0.45 direct labor hours at a cost of $19.69 per hour. What is the direct labor efficiency variance? Enter a favorable variance as a positive number. Enter an unfavorable variance as a negative number.
Dickinsen Company gathered the following data for December: Planned Actual Sales price per unit Number of units of sales $5.80 x 820,000 $4,756,000 $6.00 x 805,000 $4,830,000 Total sales a. Compute the revenue price variance. b. Compute the revenue volume variance. c. Compute the total revenue variance.
For the month of January, compute the following variances. Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect
By year-end, Oriole Corp. had recognized standard cost variances for all of its production costs, including DM, DL, variable-MOH, and fixed-MOH. The following variances exist per the trial balances; the balance of COGS at this time is $130,390. DM price variance DM efficiency variance DL price variance DL efficiency variance $5,920 Credit 4,080 Debit 1,830 Debit 2,420 Credit Variable-MOH price variance Variable-MOH efficiency variance Fixed-MOH price variance Fixed-MOH volume variance $3,860 Debit 240 Debit 1,860 Debit 870 Credit
Yohan Company has the following balances in its direct materials and direct labor variance accounts at year-end: Direct Materials Price Debit Credit Variance $1,000 Direct Materials Quantity $2,000 Variance $500 Direct Labor Rate Variance $3,000 Direct Labor Efficiency Variance Unadjusted Cost of Goods Sold equals $200,000. Which of the following would be FALSE when the year-end closing entry is made? O The Cost of Goods Sold account will be debited. O Adjusted Cost of Goods Sold will be $198,500. The Direct Labor Rate Variance account will be debited. O The Direct Materials Price Variance account will be credited.
Hogan Tax Company considers 6,000 direct labor hours or 300 tax returns its normal monthly capacity. Its standard variable overhead rate is $9 per direct labor hour. During the current month, $45,400 of variable overhead cost was incurred in working 5,600 direct labor hours to prepare 270 tax returns. Determine the following variances, and indicate whether each is favorable or unfavorable: Determine the following variances: Do not use negative signs with any of your answers. Next to each variance answer, select either "F" for Favorable or "U" for Unfavorable. Variable Overhead Variances Actual cost: Answer Split cost: Answer Standard cost: Answer a. Variable overhead spending Answer Answer b. Variable overhead efficiency Answer Answer
Deems Company's budgeted fixed factory overhead cost is P50,000 per month plus a variable factory overhead rate of P4 per direct labor hour. The standard direct labor hours allowed for November production was 18,000. An analysis of the factory overhead indicates that in November, Deems had an unfavorable budget (controllable) variance of P1,000 and a favorable volume variance of P500. Deems uses a two-way analysis of overhead variance The applied factory overhead in November is: O P122,500 O P123,000 O P121.000 O P122,000
[The following information applies to the questions displayed below.] The director of cost management for Odessa Company uses a statistical control chart to help management determine when to investigate variances. The critical value is 1 standard deviation. The company incurred the following direct-labor efficiency variances during the first six months of the current year. January February March. April May June $ 250 F 800 U 700 U 908 U 1,050 U 1,200 U The standard direct-labor cost during each of these months was $19,000. The controller has estimated that the firm's monthly direct-labor variances have a standard deviation of $950. Required: 1-a. Draw a statistical control chart and plot the variance data given above. 1-b. Which variances will be investigated?

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