Direct material variances: Direct material variances refer to the difference between the standard direct material cost and actual direct material cost incurred. Direct material cost variances are categorized into following two categories: Direct material Rate variance : this variance shows the difference of standard rate and actual rate of material. The formula to calculate this variance is as follows: Direct material rate variance = ( Actual rate – Standard rate ) × Actual Quantity Direct material usage variance: this variance shows the difference of standard usage and actual usage of material. The formula to calculate this variance is as follows: Direct material usage variance = ( Actual Quantity – Standard Quantity ) × Standard rate Direct material cost variance: this variance shows the difference of standard cost and actual cost of material. The formula to calculate this variance is as follows: Direct material cost variance = Direct material rate variance + Direct material usage variance To Indicate: The reason for offset between the two variances

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Sub. General Account

Answer 1

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 13, Problem 23CDQ

To determine

Concept Introduction:

Direct material variances:

Direct material variances refer to the difference between the standard direct material cost and actual direct material cost incurred. Direct material cost variances are categorized into following two categories:

Direct material Rate variance: this variance shows the difference of standard rate and actual rate of material. The formula to calculate this variance is as follows:

Direct material rate variance = (Actual rate – Standard rate) ×Actual Quantity

Direct material usage variance: this variance shows the difference of standard usage and actual usage of material. The formula to calculate this variance is as follows:

Direct material usage variance = (Actual Quantity – Standard Quantity)×Standard rate

Direct material cost variance: this variance shows the difference of standard cost and actual cost of material. The formula to calculate this variance is as follows:

Direct material cost variance = Direct material rate variance + Direct material usage variance

To Indicate:

The reason for offset between the two variances

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Sub. General Account

Cinturon Corporation produces high-quality leather belts. The company's plant in Boise uses a standard costing system and has set the following standards for materials and labor: Leather (3 strips @ $4) Direct labor (0.75 hr. @ $12) Total prime cost $ 12.00 9.00 $ 21.00 During the first month of the year, Boise plant produced 92,000 belts. Actual leather purchased was 297,500 strips at $3.60 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 78,400 hours at $15.00 per hour. Break down the total variance for labor into a rate variance and an efficiency variance using the columnar and formula approaches.

What is predetermined overhead rate

Answer 2

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 13, Problem 23CDQ

To determine

Concept Introduction:

Direct material variances:

Direct material variances refer to the difference between the standard direct material cost and actual direct material cost incurred. Direct material cost variances are categorized into following two categories:

Direct material Rate variance: this variance shows the difference of standard rate and actual rate of material. The formula to calculate this variance is as follows:

Direct material rate variance = (Actual rate – Standard rate) ×Actual Quantity

Direct material usage variance: this variance shows the difference of standard usage and actual usage of material. The formula to calculate this variance is as follows:

Direct material usage variance = (Actual Quantity – Standard Quantity)×Standard rate

Direct material cost variance: this variance shows the difference of standard cost and actual cost of material. The formula to calculate this variance is as follows:

Direct material cost variance = Direct material rate variance + Direct material usage variance

To Indicate:

The reason for offset between the two variances

Expert Solution & Answer

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Check out sample textbook solution

Answer 3

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 13, Problem 23CDQ

To determine

Concept Introduction:

Direct material variances:

Direct material variances refer to the difference between the standard direct material cost and actual direct material cost incurred. Direct material cost variances are categorized into following two categories:

Direct material Rate variance: this variance shows the difference of standard rate and actual rate of material. The formula to calculate this variance is as follows:

Direct material rate variance = (Actual rate – Standard rate) ×Actual Quantity

Direct material usage variance: this variance shows the difference of standard usage and actual usage of material. The formula to calculate this variance is as follows:

Direct material usage variance = (Actual Quantity – Standard Quantity)×Standard rate

Direct material cost variance: this variance shows the difference of standard cost and actual cost of material. The formula to calculate this variance is as follows:

Direct material cost variance = Direct material rate variance + Direct material usage variance

To Indicate:

The reason for offset between the two variances

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Answer 4

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 13, Problem 23CDQ

To determine