Managerial Accounting: Creating Value in a Dynamic Business Environment
11th Edition
ISBN: 9781259569562
Author: Ronald W Hilton Proffesor Prof, David Platt
Publisher: McGraw-Hill Education
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Chapter 10, Problem 22E
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.
Actual material purchases amounted to 240,000 kilograms at $.81 per kilogram. Actual costs incurred in the production of 50,000 units were as follows:
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.
- 2. Build a spreadsheet: Construct an Excel spreadsheet to solve the preceding requirement. Show how the solution will change if the following information changes: the standard direct-labor rate is $15 per hour, and the standard direct-material price is $.79 per kilogram.
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Students have asked these similar questions
Rancho Cucamonga Inc. established the following direct materials and direct labor standards for its product.
Item
Price
Quantity
Total
Direct materials
$2
3 lbs
$6
Direct labor
$6
2 hrs
$12
The firm expected to make, and made, ten (10) units of finished goods inventory. Use the table above to complete the following direct materials variance table and to answer the following questions:
Complete the following direct materials variance table. The left column reports the actual cost data and has been completed for you.
Direct Materials Variances
Actual Price x Actual Quantity
Standard Price x Actual Quantity
$3lb x (4lbs x 10 units) = $120
$ _x (_ x _) = $_
Report the variance and indicate each variance as either favorable "F" or unfavorable "U" (for example, 30U). Do not include dollar signs or spaces.
Direct materials quantity variance $___
Direct materials price variance $ ___
Total direct materials variance $___
Upon your review of Shalom Company's standard cost card. You found the following information:
Standards:
Material
Labor
Actual:
Production
Material
Labor
5.0 feet per unit @ P4.00 per foot
3.0 hours per unit @ 35.00 per hour
2,800 units produced during the month
14,500 feet used; 15,100 feet purchased @ P3.70 per foot
8,150 direct labor hours @ P36.00 per hour
Determine the variances based on the information above. Indicate as favorable or unfavorable.
Format should be: 8,000 F or 8,000 UF
No need to indicate if the amount is positive or negative.
Amounts must be in whole numbers. Example: 88,000 or (88,000)
Unit costs be in whole numbers. Example: 88
Format of percentages: 88%
Words must be in capital letters.
What is the labor rate variance?
Upon your review of Shalom Company's standard cost card. You found the following information:
Standards:
Material
Labor
Actual:
Production
Material
Labor
5.0 feet per unit @ P4.00 per foot
3.0 hours per unit @ 35.00 per hour
2,800 units produced during the month
14,500 feet used; 15,100 feet purchased @ P3.70 per foot
8,150 direct labor hours @ P36.00 per hour
Determine the variances based on the information above. Indicate as favorable or unfavorable.
Format should be: 8,000 F or 8,000 UF
No need to indicate if the amount is positive or negative.
Amounts must be in whole numbers. Example: 88,000 or (88,000)
Unit costs be in whole numbers. Example: 88
Format of percentages: 88%
Words must be in capital letters.
What is the labor efficiency variance?
Chapter 10 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 10 - Prob. 1RQCh. 10 - What is meant by the phrase management by...Ch. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - What is the interpretation of the direct-material...Ch. 10 - What manager is usually in the best position to...Ch. 10 - What is the interpretation of the direct-material...Ch. 10 - Prob. 10RQ
Ch. 10 - Prob. 11RQCh. 10 - What is the interpretation of the direct-labor...Ch. 10 - What manager is generally in the best position to...Ch. 10 - What is the interpretation of the direct-labor...Ch. 10 - What manager is generally in the best position to...Ch. 10 - Prob. 16RQCh. 10 - Describe five factors that managers often consider...Ch. 10 - Discuss several ways in which standard-costing...Ch. 10 - Describe how standard costs are used for product...Ch. 10 - Prob. 20RQCh. 10 - Prob. 21RQCh. 10 - Saskatewan Can Company manufactures recyclable...Ch. 10 - Refer to the data in the preceding exercise. Use...Ch. 10 - Cayuga Hardwoods produces handcrafted jewelry...Ch. 10 - During June, Danby Companys material purchases...Ch. 10 - Refer to the data in the preceding exercise. Draw...Ch. 10 - The director of cost management for Odessa Company...Ch. 10 - Due to evaporation during production, Plano...Ch. 10 - Prob. 30ECh. 10 - Refer to the data in Exercise 1022, regarding...Ch. 10 - Saskatewan Can Company manufactures recyclable...Ch. 10 - New Jersey Valve Company manufactured 7,800 units...Ch. 10 - Prob. 34PCh. 10 - During May, Joliet Fabrics Corporation...Ch. 10 - Sal Amato operates a residential landscaping...Ch. 10 - Santa Rosa Industries uses a standard-costing...Ch. 10 - The following data pertain to Colgate-Palmolives...Ch. 10 - Orion Corporation has established the following...Ch. 10 - Associated Media Graphics (AMG) is a rapidly...Ch. 10 - The director of cost management for Portland...Ch. 10 - Ogwood Companys Johnstown Division is a small...Ch. 10 - Quincy Farms produces items made from local farm...Ch. 10 - Schiffer Corporation manufactures agricultural...Ch. 10 - Aqua float Corporation manufactures rafts for use...Ch. 10 - Rocky Mountain Camping Equipment, Inc. has...Ch. 10 - Springsteen Company manufactures guitars. The...Ch. 10 - Springsteen Company manufactures guitars. The...Ch. 10 - European Styles, Inc. manufactures womens blouses...Ch. 10 - MacGyver Corporation manufactures a product called...
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What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY