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Business Accounting MANAGERIAL ACCT W/CONNECT >IC<

Standard cost card: The standard cost card is a statement that describes the standard costs of materials, standard labor cost and standard variable overhead cost per unit. It calculates the standard cost of production per unit. Cost variance: The Cost variance is the difference between the costs actually incurred and the budgeted or standard costs that is actually incurred. The cost variance may be favorable or unfavorable. When the actual cost incurred is more than the budgeted amount, there will be an unfavorable cost variance and when the actual cost incurred is less than the budgeted amount then the cost variance is favorable. 1.a. To Compute: The price and quantity variance for direct materials based on given data. Solution: Step 1: The standard quantity of direct material per stick is 4.80 feet and actual quantity per stick is 5.00 feet. The computation is as below. Details (a) Work in progress- direct materials $115,200 (b) Standard direct material cost per unit $3 (c) Standard quantity of direct materials (a/b) 38,400 (d) Number of sticks produced 8,000 (e) Standard quantity per stick (c/d) 4.80 (f) Variance of usage of direct materials from standard quantity 0.20 (g) Actual quantity of direct materials used (in feet) (e + f) 5 Step 2: Price variance for direct materials Details (a) Actual cost of direct materials purchased (60,000 feet) $174,000 (b) Standard direct material cost $180,000 (c) Price variation of direct materials (b -a ) (favorable) $6,000 Step 2: Quantity variance for direct materials 1.b. To prepare: The journal entries to record all activities of direct materials. Solutions: a) Account name Debit Credit Direct materials inventory $180,000 Material price variance $6,0000 Account payable $174,000 (To record the credit purchased) b) Account name Debit Credit Work in progress $115,200 Material quantity variance $4,800 Direct materials inventory $120,000 (To record the record the transfer of direct material to work in progress) 2.a. To Compute: The rate and efficiency variance for direct labor based on the given data. Solution: Computation of price and efficiency for direct labor is as below. Step 1: The computation of actual hours and standard hours Details (a) Standard hours per stick 2 (b) Number of stick produced and sold 8,000 (c) Total standard hours (8000*2) 16,000 (d) Variable overhead efficiency variance ( unfavorable ) $650 (e) Standard variable manufacturing overhead rate per stick $1.30 (f) Excess houses worked in excess of standard hours (d/e) 500 (g) Actual direct labor hours worked (c + f) 16,500 (h) Wages Payable $79,200 (i) Actual rate for direct labor hour(h / g) $4.80 (j) Standard rate for direct labor hour $5.00 Step 2: Labor rate variance = $3,300 ( favorable ) (as given in question) Step 3:Labor efficiency variance 2.b. To prepare: The journal entries to record all activities relating to direct labor. Solution: Journal entries are as below Account name Debit Credit Work in progress (Standard rate x standard hour) $80,000 Labor efficiency variance $2,500 Labor rate variance $3,300 Wages payable $79,200 (To record the direct labor expenses) 3.a. To Compute: The variable overhead rate variance from the given data. Solution: The variable overhead spending variance is $1,650. Step 1: (a) Actual direct labor hours worked 16,500 (b) Actual manufacturing overhead $19,800 (c) Actual rate for manufacturing overhead (a / b) $1.20 Step 2 3.b. To Verify: The variable overhead efficiency variance given. Solution: The variable overhead efficiency variance given is verified as below. Variable overhead efficiency variance = (Actual Hours worked x Standard OH rate) − (Standard hours allowed − Standard OH rate) 4. To State: The possible causes of each variance computed above. Solution: The possible causes of each variance are stated below. 1 . Direct materials price variance (favorable): Decrease in price of raw materials, discount received for bulk purchase, purchase of low quality materials, error in setting direct materials standards etc. 2. Direct materials quantity variance (unfavorable): Unskilled workers, use of poor quality materials, faulty adjusted machines and equipment, inaccurate standards etc. 3. Labor rate variance ( favorable): Use of skilled workers, change in wages rates, incorrect standards, properly adjusted machine etc. 4. Labor efficiency variance ( unfavorable): Use of unskilled workers, poor adjusted of machines and equipment, error in setting standards. 5. Variable overhead spending variance (favorable): Decrease in costs, Use of skilled workers purchase in economical lots, low spoilage and wastage, inaccurate standards etc. 6. Variable overhead efficiency variance (unfavorable)Use of unskilled workers, poor adjusted of machines and equipment, error in setting standards. 4. To Prepare: A standard cost card for one hockey stick. Solution: A standard cost card for one hockey stick is as below. Standard quantity or Hours Standard rate or price Standard Cost Direct Materials 4.80 Feet $3.00 per feet $14.40 Direct labor 2 hours $5.00 per hour $10.00 Variable manufacturing overhead 2 hours $1.30 per hour $2.60 Total Standard Cost $27.00

Standard cost card: The standard cost card is a statement that describes the standard costs of materials, standard labor cost and standard variable overhead cost per unit. It calculates the standard cost of production per unit. Cost variance: The Cost variance is the difference between the costs actually incurred and the budgeted or standard costs that is actually incurred. The cost variance may be favorable or unfavorable. When the actual cost incurred is more than the budgeted amount, there will be an unfavorable cost variance and when the actual cost incurred is less than the budgeted amount then the cost variance is favorable. 1.a. To Compute: The price and quantity variance for direct materials based on given data. Solution: Step 1: The standard quantity of direct material per stick is 4.80 feet and actual quantity per stick is 5.00 feet. The computation is as below. Details (a) Work in progress- direct materials $115,200 (b) Standard direct material cost per unit $3 (c) Standard quantity of direct materials (a/b) 38,400 (d) Number of sticks produced 8,000 (e) Standard quantity per stick (c/d) 4.80 (f) Variance of usage of direct materials from standard quantity 0.20 (g) Actual quantity of direct materials used (in feet) (e + f) 5 Step 2: Price variance for direct materials Details (a) Actual cost of direct materials purchased (60,000 feet) $174,000 (b) Standard direct material cost $180,000 (c) Price variation of direct materials (b -a ) (favorable) $6,000 Step 2: Quantity variance for direct materials 1.b. To prepare: The journal entries to record all activities of direct materials. Solutions: a) Account name Debit Credit Direct materials inventory $180,000 Material price variance $6,0000 Account payable $174,000 (To record the credit purchased) b) Account name Debit Credit Work in progress $115,200 Material quantity variance $4,800 Direct materials inventory $120,000 (To record the record the transfer of direct material to work in progress) 2.a. To Compute: The rate and efficiency variance for direct labor based on the given data. Solution: Computation of price and efficiency for direct labor is as below. Step 1: The computation of actual hours and standard hours Details (a) Standard hours per stick 2 (b) Number of stick produced and sold 8,000 (c) Total standard hours (8000*2) 16,000 (d) Variable overhead efficiency variance ( unfavorable ) $650 (e) Standard variable manufacturing overhead rate per stick $1.30 (f) Excess houses worked in excess of standard hours (d/e) 500 (g) Actual direct labor hours worked (c + f) 16,500 (h) Wages Payable $79,200 (i) Actual rate for direct labor hour(h / g) $4.80 (j) Standard rate for direct labor hour $5.00 Step 2: Labor rate variance = $3,300 ( favorable ) (as given in question) Step 3:Labor efficiency variance 2.b. To prepare: The journal entries to record all activities relating to direct labor. Solution: Journal entries are as below Account name Debit Credit Work in progress (Standard rate x standard hour) $80,000 Labor efficiency variance $2,500 Labor rate variance $3,300 Wages payable $79,200 (To record the direct labor expenses) 3.a. To Compute: The variable overhead rate variance from the given data. Solution: The variable overhead spending variance is $1,650. Step 1: (a) Actual direct labor hours worked 16,500 (b) Actual manufacturing overhead $19,800 (c) Actual rate for manufacturing overhead (a / b) $1.20 Step 2 3.b. To Verify: The variable overhead efficiency variance given. Solution: The variable overhead efficiency variance given is verified as below. Variable overhead efficiency variance = (Actual Hours worked x Standard OH rate) − (Standard hours allowed − Standard OH rate) 4. To State: The possible causes of each variance computed above. Solution: The possible causes of each variance are stated below. 1 . Direct materials price variance (favorable): Decrease in price of raw materials, discount received for bulk purchase, purchase of low quality materials, error in setting direct materials standards etc. 2. Direct materials quantity variance (unfavorable): Unskilled workers, use of poor quality materials, faulty adjusted machines and equipment, inaccurate standards etc. 3. Labor rate variance ( favorable): Use of skilled workers, change in wages rates, incorrect standards, properly adjusted machine etc. 4. Labor efficiency variance ( unfavorable): Use of unskilled workers, poor adjusted of machines and equipment, error in setting standards. 5. Variable overhead spending variance (favorable): Decrease in costs, Use of skilled workers purchase in economical lots, low spoilage and wastage, inaccurate standards etc. 6. Variable overhead efficiency variance (unfavorable)Use of unskilled workers, poor adjusted of machines and equipment, error in setting standards. 4. To Prepare: A standard cost card for one hockey stick. Solution: A standard cost card for one hockey stick is as below. Standard quantity or Hours Standard rate or price Standard Cost Direct Materials 4.80 Feet $3.00 per feet $14.40 Direct labor 2 hours $5.00 per hour $10.00 Variable manufacturing overhead 2 hours $1.30 per hour $2.60 Total Standard Cost $27.00

MANAGERIAL ACCT W/CONNECT >IC<

MANAGERIAL ACCT W/CONNECT >IC<

15th Edition

ISBN: 9781259405303

Author: Garrison

Publisher: MCG

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MANAGERIAL ACCT W/CONNECT >IC<

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 - Prob. 1E Ch. 10.B - Prob. 2E Ch. 10.B - Prob. 3P Ch. 10.B - Prob. 4P Ch. 10.B - Prob. 5C 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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What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY