Variances, Entries, and Income Statement A summary of Martindale Company's manufacturing variance report for May follows: Direct material Direct labor Variable overhead Fixed overhead Total Standard Costs (9,200 units) $38,640 193,200 22,080 9,660 $263,580 Actual Costs (9,200 units) Variances $41,760 $3,120 U 191,760 1,440 F 23,230 1,150 U 9,660 $266,410 $2,830 U Standard materials cost per unit of product is 0.5 pounds at $8.40 per pound, and standard direct labor cost is 1.5 hours at $14.00 per hour. The total actual materials cost represents 4,800 pounds purchased at $8.70 per pound. Total actual labor cost represents 14,100 hours at $13.60 per hour. According to standards, variable overhead rate is applied at $1.60 per direct labor hour (based on a normal capacity of 15,000 direct labor hours or 10,000 units of product). Assume that all fixed overhead is applied to work-in-progress inventory.

Variances, Entries, and Income Statement A summary of Martindale Company's manufacturing variance report for May follows: Direct material Direct labor Variable overhead Fixed overhead Total Standard Costs (9,200 units) $38,640 193,200 22,080 9,660 $263,580 Actual Costs (9,200 units) Variances $41,760 $3,120 U 191,760 1,440 F 23,230 1,150 U 9,660 $266,410 $2,830 U Standard materials cost per unit of product is 0.5 pounds at $8.40 per pound, and standard direct labor cost is 1.5 hours at $14.00 per hour. The total actual materials cost represents 4,800 pounds purchased at $8.70 per pound. Total actual labor cost represents 14,100 hours at $13.60 per hour. According to standards, variable overhead rate is applied at $1.60 per direct labor hour (based on a normal capacity of 15,000 direct labor hours or 10,000 units of product). Assume that all fixed overhead is applied to work-in-progress inventory.

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Description: Variances, Entries, and Income StatementA summary of Martindale Company's manufacturingvariance report for May follows:Direct materialDirect laborVariable overheadFixed overheadTotal StandardCosts (9,200units)$38,640193,20022,0809,660$263,580ActualC

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

Variances, Entries, and Income Statement
A summary of Martindale Company's manufacturing
variance report for May follows:
Direct material
Direct labor
Variable overhead
Fixed overhead
Total Standard
Costs (9,200
units)
$38,640
193,200
22,080
9,660
$263,580
Actual
Costs
(9,200
units)
Variances
$41,760 $3,120 U
191,760
1,440 F
23,230 1,150 U
9,660
$266,410 $2,830 U
Standard materials cost per unit of product is 0.5
pounds at $8.40 per pound, and standard direct labor
cost is 1.5 hours at $14.00 per hour. The total actual
materials cost represents 4,800 pounds purchased at
$8.70 per pound. Total actual labor cost represents
14,100 hours at $13.60 per hour. According to
standards, variable overhead rate is applied at $1.60 per
direct labor hour (based on a normal capacity of 15,000
direct labor hours or 10,000 units of product). Assume
that all fixed overhead is applied to work-in-progress
inventory.

a. 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.
Materials Variances
Actual cost:
$
Split cost:
$
Standard cost:
$
Materials price
$
Materials efficiency $
Labor Variances
Actual cost:
$
Split cost:
$
Standard cost: $
Labor rate
$
Labor efficiency $
Actual cost:
Split cost:
Standard cost:
Variable overhead spending $
Variable overhead efficiency $
<
$
$
◄►
(▶►
Variable Overhead Variances
◄►
¶

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