Managerial Accounting
7th Edition
ISBN: 9781337116008
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: South Western Educational Publishing
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Chapter 10, Problem 52E
10-52 Materials and Labor Variances
Refer to the information for Deporte Company above.
Required:
Compute the materials and labor variances associated with the changeover activity, labeling each variance as favorable or unfavorable.
Use the following information for Exercises 10-52 and 10-53:
Deporte Company produces single-colored T-shirts. Materials for the shirts are dyed in large vats. After dying the materials for a given color, the vats must be cleaned and prepared for the next batch of materials to be colored. The following standards for changeover for a given batch have been established:
During the year, 79,500 pounds of material were purchased and used for the changeover activity. There were 30,000 batches produced, with the following actual prime costs:
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[The following information applies to the questions displayed below.]
The Platter Valley factory of Bybee Industries manufactures field boots. The cost of each boot includes direct materials,
direct labor, and manufacturing (factory) overhead. The firm traces all direct costs to products, and it assigns
overhead cost to products based on direct labor hours.
Required:
1. Compute the factory overhead flexible-budget variance, the factory overhead spending variance, and the efficiency variance for
variable factory overhead for March and state whether each variance is favorable (F) or unfavorable (U).
2. Provide the appropriate journal entry to record the variable overhead spending variance and a second entry to record the variable
overhead efficiency variance for March. Assume that the company uses a single account, Factory Overhead, to record overhead costs.
The company budgeted $11,925 variable factory overhead cost, $96,750 for fixed factory overhead cost and…
Chapter 10 Solutions
Managerial Accounting
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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