16th Edition

ISBN: 9781307670585

Author: Garrison

Publisher: MCG

Concept explainers

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 …

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 t…

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Textbook Question

Chapter 10.A, Problem 10P

PROBLEM 10A-10 Comprehensive Standard Cost Variances LO10-1, L010-2, LO10-3, LO10-4

“Wonderful! Not only did our salespeople do a good job in meeting the sales budget this year, but our production people did a good job in controlling costs as wel" said Kim Clark, president of Martell Company. "Our S18,300 overall manufacturing cost variance is only 1.2% of the SI,536,000 standard cost of products made during the year. That's well within the 3% parameter set by management for acceptable variances. It looks like everyone will be in line for a bonus this year.’
The company produces and sells a single product. The standard cost card for the product follows:

Inputs	(1) Standard Quantity or Hours	(2) Standard Price or Rate	Standard Cost (1) x(2)
Direct materials	2 feet	$8.45 per foot	$16.90
Direct labor	1.4 hours	$16 per hour	22.40
Variable overhead	1.4 hours	$2.50 per hour	3.50
Fixed overhead	1.4 hours	$6 per hour	8.40
Total standard cost per unit			$51.20

The following additional information is available for the year just completed
a The company manufactured 30,000 units of product during the year.

A total of 64,000 feet of material was purchased during the year at a cost of $8.55 per foot. All of this material was used to manufacture the 30,000 units produced There were no beginning or ending inventories for the year.
The company worked 43,500 direct labor-hours during the year at a direct labor cost of $15.80 per hour.
Overhead is applied to products on the basis of standard direct labor-hours. Data relating to manufacturing overhead costs follow:

Chapter 10.A, Problem 10P, PROBLEM 10A-10 Comprehensive Standard Cost Variances LO10-1, L010-2, LO10-3, LO10-4 “Wonderful! Not

Required:

Compute the materials price and quantity' variances for the year.
Compute the labor rate and efficiency variances for the year.
For manufacturing overhead compute:

a. The variable overhead rate and efficiency variances for the year.

b. The fixed overhead budget and volume variances for the year.

Total the variances you have computed, and compare the net amount with the $18,300 mentioned by the president. Do you that bonuses should be given to everyone for good cost control during the year? Explain.

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Chapter 10.A, Problem 9P

Chapter 10.A, Problem 11P

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Chapter 10 Solutions

MANAGERIAL ACCOUTING LL WITH ACCESS

Ch. 10.A - EXERCISE 10A-1 Fixed Overhead Variances LO10-4...Ch. 10.A - EXERCISE 10A-2 Predetermined Overhead Rate;...Ch. 10.A - Prob. 3E Ch. 10.A - EXERCISE 10A-4 Fixed Overhead Variances LO10-4...Ch. 10.A - EXERCISE 10A5 Using Fixed Overhead Variances LO104...Ch. 10.A - EXERCISE 10A-6 Predetermined Overhead Rate LO10-4...Ch. 10.A - EXERCISE 10A-7 Relations Among Fixed Overhead...Ch. 10.A - Prob. 8P Ch. 10.A - PROBLEM 10A-9 Applying Overhead; Overhead...Ch. 10.A - PROBLEM 10A-10 Comprehensive Standard Cost...

Ch. 10.A - PROBLEM 10A-11 Comprehensive Standard Cost...Ch. 10.A - Prob. 12P Ch. 10.B - EXERCISE 10B-1 Standard Cost Flows; Income...Ch. 10.B - Prob. 2E Ch. 10.B - Prob. 3E Ch. 10.B - Prob. 4E Ch. 10.B - Prob. 5P Ch. 10.B - Prob. 6P Ch. 10 - Prob. 1Q Ch. 10 - Why are separate price and quantity variances...Ch. 10 - 10-3 Who is generally responsible for the...Ch. 10 - The materials price variance can be computed at...Ch. 10 - 10-5 If the materials price variance is favorable...Ch. 10 - Prob. 6Q Ch. 10 - Prob. 7Q Ch. 10 - 10-8 What effect, if any, would you expect...Ch. 10 - 10-9 If variable manufacturing overhead is applied...Ch. 10 - 10-10 Why can undue emphasis on labor efficiency...Ch. 10 - The Excel worksheet form that appears below is to...Ch. 10 - Prob. 2AE Ch. 10 - Prob. 1F15 Ch. 10 - Prob. 2F15 Ch. 10 - Prob. 3F15 Ch. 10 - Prob. 4F15 Ch. 10 - Prob. 5F15 Ch. 10 - Prob. 6F15 Ch. 10 - Prob. 7F15 Ch. 10 - Prob. 8F15 Ch. 10 - Prob. 9F15 Ch. 10 - Preble Company manufactures one product. Its...Ch. 10 - Prob. 11F15 Ch. 10 - Prob. 12F15 Ch. 10 - Prob. 13F15 Ch. 10 - Prob. 14F15 Ch. 10 - Prob. 15F15 Ch. 10 - EXERCISE 10-1 Direct Materials Variances LO10-1...Ch. 10 - EXERCISE 10-2 Direct Labor Variances...Ch. 10 - EXERCISE 10–3 Variable Overhead Variances...Ch. 10 - EXERCISE 10-4 Direct Labor and Variable...Ch. 10 - EXERCISE 10-5 Working Backwards from Labor...Ch. 10 - EXERCISE 10-6 Direct Materials and Direct Labor...Ch. 10 - EXERCISE 10-7 Direct Materials Variances LOIO-1...Ch. 10 - EXERCISE 10-8 Direct Materials and Direct Labor...Ch. 10 - PROBLEM 10-9 Comprehensive Variance Analysis...Ch. 10 - PROBLEM 10-10 Multiple Products, Materials, and...Ch. 10 - PROBLEM 10-11 Direct Materials and Direct Labor...Ch. 10 - PROBLEM 10-12 Variance Analysis in a...Ch. 10 - Prob. 13P Ch. 10 - Prob. 14P Ch. 10 - PROBLEM 10-15 Comprehensive Variance Analysis...Ch. 10 - Prob. 16P Ch. 10 - Prob. 17C

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