The following data relates to Potawatomi Corporation's operations for the month. Potawatomi produced8,500 units and the normal monthly capacity is 20,000 direct labor hours.Direct Material:Standard (5 lbs. @ $2.10/lb.)Actual (39,000 lbs. @ $2.20/lb.)StandardUnit CostsTotalActual Costs$10.50$85,800Direct Labor:Standard (2 hrs. @ $12/hr.)$24.00Actual (18,000 hrs. @ $11.90/hr.)$214,200Variable Overhead:Standard (2 hrs. @ $4.00/hr.)$8.00Actual$69,700Total$42.50$369,700Use fork diagrams to calculate the following variances:b. Materials efficiency variancea.Materials price varianceC.Labor rate variancee.Variable overhead spending variancef.Variable overhead efficiency varianced. Labor efficiency variance

Sure, let's calculate each of the variances using the fork diagram method:a. Materials price…

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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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During June, Danby Company's material purchases amounted to 10,920 pounds at a price of $5.30 per pound. Actual costs incurred in the production of 2,100 units were as follows: Direct labor: Direct material: $74,693 ($11.30 per hour) $45,633 ($5.30 per pound) The standards for one unit of Danby Company's product are as follows: Direct Labor: Quantity, 3 hours per unit Rate, $11.00 per hour Direct Material: Quantity, 4 pounds per unit Price, $5.10 per pound ok at Required: Fill in the amounts in the tables below. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Fill in the amounts in the tables below. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no "Actual Price" and "Standard Price" to 2 decimal places.) Direct-Material Price and Quantity Variances Actual Material Cost Projected Material Cost Standard Material Cost Actual Quantity Actual Price Actual Quantity Standard…
Garrison Manufacturing has the following standard cost sheet for one of its products: direct materials (5m @ $6) $30 Direct labour (1.5 hours @$ 10) 15 variable overhead ( 1 hour @ $7) 7 Fixed overhead (2 hours @ $3) 6 Standard unit cost $58 *Rate based on expected activity of 12,000 hours. During the most recent year, the following actual results were recorded: production 13,000 units fixed overhead $36,000 Variable overhead $60,000 Direct materials (62,500m purchased) $382,500 direct labour (15,900 hours)…
Baxter Company sold 9,000 units at $125 per unit. Normal production is 9,400 units. Standard: 5 yards per unit at $6.30 per yard Standard: 2.75 hours per unit at $16.00 Standard: Variable overhead at $1.05 per unit Standard: Fixed overhead $206,800 (budgeted and actual amount) Actual yards used: 45,760 yards hours at $6.25 per yard Actual hours worked: 24,500 hours at $15.90 per hour Actual total factory overhead: $236,500 Prepare an income statement that includes variances for the year ending December 31 through gross profit for Baxter Company using the above information. Enter favorable variances as negative numbers. Do not round fixed overhead rate calculation when determining fixed factory overhead volume variance. Baxter Company Income Statement Through Gross Profit For the Year Ending December 31 Line Item Description Sales Cost of goods sold-at standard Gross profit-at standard Less variances from standard cost Direct materials price Direct materials quantity Direct labor rate…
Antuan Company set the following standard costs per unit for its product. Direct materials (6 pounds @ $5 per pound) $ 30 Direct labor (2 hours @ $17 per hour) 34 Overhead (2 hours @ $18.50 per hour). 37 Standard cost per unit $ 101 The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level of 75% of the factory's capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month at the 75% capacity level. Overhead Budget (75% Capacity) Variable overhead costs Indirect materials. $ 45,000 Indirect labor 180,000 Power 45,000 Maintenance 90,000 360,000 Total variable overhead costs Fixed overhead costs 24,000 Depreciation-Building Depreciation-Machinery 80,000 Taxes and insurance 12,000 Supervisory salaries. 79,000 Total fixed overhead costs 195,000 Total overhead costs $ 555,000 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (91,000 pounds @ $5.10 per…
The following information relates to production activities of Mercer Manufacturing for the year. Actual direct materials used 17,300 pounds at $4.70 per pound Actual direct labor used 17,935 hours at $32 per hour Actual units produced 32,600 Standard quantity and price per unit for direct materials 0.50 pound at $4.65 per pound Standard quantity and rate per unit for direct labor 0.50 hour at $33 per hour AR = Actual RateSR = Standard RateAQ = Actual QuantitySQ = Standard QuantityAP = Actual PriceSP = Standard Price (1) Compute the direct materials price and quantity variances.(2) Compute the direct labor rate and efficiency variances.
The standard factory overhead rate is $10 per direct labor hour ($8 for variable factory overhead and $2 for fixed factory overhead) based on 100% of normal capacity of 30,000 direct labor hours. The standard cost and the actual cost of factory overhead for the production of 5,000 units during May were as follows: Line Item Description Amount Standard: 25,000 hours at $10 $250,000 Actual: Variable factory overhead $202,500 Fixed factory overhead 60,000 The variable factory overhead controllable variance is
Javon Company set standards of 2 hours of direct labor per unit at a rate of $15.10 per hour. During October, the company actually uses 11,000 hours of direct labor at a $168,300 total cost to produce 5,700 units. In November, the company uses 15,000 hours of direct labor at a $230,250 total cost to produce 6,100 units of product.AH = Actual HoursSH = Standard HoursAR = Actual RateSR = Standard Rate(1) Compute the direct labor rate variance, the direct labor efficiency variance, and the total direct labor variance for each of these two months.(2) Javon investigates variances of more than 5% of actual direct labor cost. Which direct labor variances will the company investigate further?
Sandhill Building Supplies' total materials costs are $37,200 and total conversion costs are $39,000. Equivalent units of production for materials are 12,000, and 6,000 for conversion costs. Compute the unit costs for materials, conversion costs, and total manufacturing costs for the month. (Round answers to 2 decimal places, e.g. 15.25.) Unit costs Materials $ Conversion Costs $ Total
Walton Company incurred manufacturing overhead cost for the year as follows. Direct materials $ 39.00 /unit Direct labor $ 27.40 /unit Manufacturing overhead Variable $ 11.10 /unit Fixed ($18.80/unit for 1,900 units) $ 35,720 Variable selling and administrative expenses $ 10,360 Fixed selling and administrative expenses $ 15,500 The company produced 1,900 units and sold 1,400 of them at $182.00 per unit. Assume that the production manager is paid a 1 percent bonus based on the company’s net income. Required Prepare an income statement using absorption costing. Prepare an income statement using variable costing. Determine the manager’s bonus using each approach. Which approach would you recommend for internal reporting?
Sedona Company set the following standard costs for one unit of its product for this year. Direct material (15 pounds $3.40 per pound) Direct labor (10 hours e S9.70 per DLH) Veriable overhead (10 hours $4.90 per DLH) Fied overhead (10 hours $2. 00 per DLH) Standard cost per unit $ 51.00 97.00 49.00 20.00 $ 217.00 The $6.90 ($4.90 - $2.00) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 41,300 units, which is 70% of the factory's capacity of 59,000 units per month. The following monthly flexible budget information Is avallable. Operat ing Levels (K of capacity) 65% 30, 350 383,500 Flexible Budget Budgeted production (units) Rudgeted direct labor (standard hours) Budgeted overhead Varlable overhead Fised overhead Total avertead 41, 300 413,000 75% 44, 250 442, 500 $1,879,150 826,000 $ 2,023, 700 826, 000 $ 2,849, 700 $2,168, 250 126, e00 $ 2,994, 250 $ 2,705, 150 During the current month, the company operated at 65% of capacity, direct labor of…
O During June, Fraser Company's material purchases amounted to 5,100 pounds at a price of $8.25 per pound. Actual costs incurred in the production of 1,000 units were as follows: Direct labor: Direct material: $ 90,396 ($18.6 per hour) $ 24,420 ($8.25 per pound) The standards for one unit of Fraser Company's product are as follows: Direct labor: Quantity, 2.9 hours per unit Rate, $18.4 per hour Direct material: Quantity, 1.5 pounds per unit Price, $7.75 per pound Required: Compute the following variances for the month of June. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).) 1. Direct-material price variance 2 Direct-material quantity variance 3. Direct-material purchase price variance 4. Direct-labor rate variance 5. Direct-labor efficiency variance
Camila Company has set the following standard cost per unit for direct materials and direct labor. Direct materials (14 pounds @ $5 per pound) $ 70 Direct labor (2 hours @ $14 per hour) 28 During June the company incurred the following actual costs to produce 8,800 units. Direct materials (125,300 pounds @ $4.75 per pound) $ 595,175 Direct labor (22,300 hours @ $14.15 per hour) 315,545 AR = Actual RateSR = Standard RateAQ = Actual QuantitySQ = Standard QuantityAP = Actual PriceSP = Standard Price(1) Compute the direct materials price and quantity variances.(2) Compute the direct labor rate variance and the direct labor efficiency variance.

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