MANAGERIAL ACCOUNTING FOR MANAGERS
MANAGERIAL ACCOUNTING FOR MANAGERS
5th Edition
ISBN: 9781264196456
Author: Noreen
Publisher: MCG
Question
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Chapter 10, Problem 10.10P

1

To determine

Prepare standard cost card for each product with direct material and direct labor.

Introduction: Standard costing means the accounting system which is used by manufacturers mainly to identify variances or difference that occur in cost. The difference is identified between actual cost of goods that were manufactured and those cost which should have occurred when actual goods were manufactured.

1

Expert Solution
Check Mark

Answer to Problem 10.10P

Standard cost of A6 is $28.42 and Z7 is $41.01

Explanation of Solution

Standard cost of A6

  Standard cost =( ( Direct material cost of X442 per unit  × Required material of X442 per unit )+ ( Direct material cost of Y661 per unit × Required material of Y661 per unit )+ ( Direct labor cost of sintering per unit ×Required labor hour of sintering per unit )+ ( Direct labor cost of sintering per unit × Required labor hour of sintering per unit ))Standard cost =(3.5×1.8)+(1.4×2)+(19.8×0.2)+(19.2×0.8)Standard cost =$28.42

Standard cost of Z7

  Standard cost =( ( Direct material cost of X442 per unit  × Required material of X442 per unit )+ ( Direct material cost of Y661 per unit × Required material of Y661 per unit )+ ( Direct labor cost of sintering per unit ×Required labor hour of sintering per unit )+ ( Direct labor cost of sintering per unit × Required labor hour of sintering per unit ))Standard cost =(3.5×3)+(1.4×4.5)+(19.8×0.35)+(19.2×0.9)Standard cost =$41.01

2

To determine

Compute material price variance and material quantity variance.

Introduction: Standard costing means the accounting system which is used by manufacturers mainly to identify variances or difference that occur in cost. The difference is identified between actual cost of goods that were manufactured and those cost which should have occurred when actual goods were manufactured.

2

Expert Solution
Check Mark

Answer to Problem 10.10P

The material price variance of X442 is $1,450 and Y661 is $775 and material quantity variance X442 is $700 and Y661 is $1,400.

Explanation of Solution

Material price variance of X442

  Material price variance =(Purchase of material×( Cost of material Purchase of material Actual material cost per unit ))Material price variance =(14,500×( 52,200 14,500 3.5))Material price variance =14,500×(3.63.5)Material price variance =$1,450

Material price variance of Y661

  Material price variance =(Purchase of material×( Cost of material Purchase of material Actual material cost per unit ))Material price variance =(15,500×( 1.4 20,925 15,500 ))Material price variance =14,500×(1.41.35)Material price variance =$775

Material quantity variance X442

  Material quantity variance = ( Actual material cost per unit× ( Material used in A6+ Material used in Z7 )  Material used)Material quantity variance =3.5×((2,700+6,000)-8,500)Material quantity variance =$700

Material quantity variance Y661

  Material quantity variance = ( Actual material cost per unit× ( Material used( Material used in A6+ Material used in Z7 ) ))Material quantity variance =1.4×(13,000(3,000+9,000))Material quantity variance =$1,400

3

To determine

Compute labor rate variance and labor efficiency variance.

Introduction: Standard costing means the accounting system which is used by manufacturers mainly to identify variances or difference that occur in cost. The difference is identified between actual cost of goods that were manufactured and those cost which should have occurred when actual goods were manufactured.

3

Expert Solution
Check Mark

Answer to Problem 10.10P

The labor rate variance of sintering is $3,240 and finishing is $5,130 and labor efficiency variance of sintering is $3,960 and finishing is $3,960.

Explanation of Solution

Labor rate variance for sinteringLabor rate variance =( Total labor hours× ( Total labor cost Total labor hours ) - Actual labor cost per unit ) Labor rate variance =1,200×( 27,000 1,20019.8)Labor rate variance =$3,240

Labor efficiency variance for sintering Labor efficiency variance = ( Actual labor cost per unit× ( Used labor hour -( Labor hour used in A6 +Labor hour used in Z7 ) ))Labor efficiency variance =19.8×(1,200(300+700))Labor efficiency variance =$3,960

Labor rate variance for FinishingLabor rate variance =( Total labor hours× ( Total labor cost Total labor hours ) - Actual labor cost per unit ) Labor rate variance =2,850×( 59,850 2,85019.2)Labor rate variance =$5,130

Labor efficiency variance for FinishingLabor efficiency variance = ( Actual labor cost per unit× ( ( Labor hour used in A6 +Labor hour used in Z7 )Used labor hour ))Labor efficiency variance =19.2×(1,200+1,800)2,850))Labor efficiency variance =$3,960

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