Cost Management
Cost Management
8th Edition
ISBN: 9781259917028
Author: BLOCHER, Edward
Publisher: Mcgraw-hill Education,
Question
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Chapter 14, Problem 48P

1. a

To determine

Calculate the direct labor efficiency variance and state whether it is favorable (F) or unfavorable (U).

1. a

Expert Solution
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Explanation of Solution

Calculate the direct labor efficiency variance and state whether it is favorable (F) or unfavorable (U).

Directlaborefficiencyvariance=[Standardprice×(Actualquantity×Standardquantity)]=[$18.20perhr×(36,500hours37,200hours)]=$12,740F

1. b

To determine

Calculate the direct labor rate variance and state whether it is favorable (F) or unfavorable (U).

1. b

Expert Solution
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Explanation of Solution

Calculate the direct labor rate variance and state whether it is favorable (F) or unfavorable (U).

Directlaborratevariance}=[(Actualprice×Actualquantity)(Standardprice×Actualquantity)]=$600,000($18.20perhr×36,500hours)=$64,300F

1. c

To determine

Calculate the actual number of kilograms of material used in the production process during the month.

1. c

Expert Solution
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Explanation of Solution

Calculate the actual number of kilograms of material used in the production process during the month.

The actual number of kilograms of material usedinNovember}=(Standardquantityallowed+Efficiencyvariance)=51,200kg+($1,500÷$5perkg)=51,500kg.

1. d

To determine

Calculate the actual price paid per kilogram of material during the month.

1. d

Expert Solution
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Explanation of Solution

Calculate the actual price paid per kilogram of material during the month.

Actualpriceperkilogram(AP)}=(Standardpriceperkg.(SP)Perunitfavorablepricevariance)=$5perkg($750÷50,000kgs)=$4.985

Note: price variance is calculated at the point of purchase.

Working note:

(1)Calculate the direct materials purchase-price variance:

Direct materials purchase-price variance}=(TotaldirectmaterialsvarianceDirectmaterialsusagevariance)=$750U$1,500U=$750F

1. e

To determine

Calculate the amount of direct materials cost and direct labor cost transferred to the finished goods inventory account during the end of the month.

1. e

Expert Solution
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Explanation of Solution

Calculate the amount of direct materials cost and direct labor cost transferred to the finished goods inventory account during the end of the month.

The amount of direct materialscost and direct labor cost transferred to the finished goods inventory account duringNovember}=(Standardmanufacturingcostperunit×UnitsmanufacturedinNovember)=[($40+$109.20perunit)×5,600units]=$835,520

1. f

To determine

Calculate the total amount of direct materials cost and direct labor cost in the work-in-process inventory account during the end of the month.

1. f

Expert Solution
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Explanation of Solution

Calculate the total amount of direct materials cost and direct labor cost in the work-in-process inventory account during the end of the month.

 MaterialsLaborTotal
Equivalent units in ending WIP inventory800600 
Standard cost per equivalent unit× $40× $109.20 
Ending inventory at standard cost$32,000.00$65,250$97,520

Table (1)

2.

To determine

Prepare journal entries to record all transaction.

2.

Expert Solution
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Explanation of Solution

Prepare journal entries to record all transaction.

DateAccount Title and ExplanationDebit ($)Credit ($)
 Direct materials Inventory$250,000 
      Direct materials Purchase-price Variance $750
      Accounts Payable (plug) $249,250
[Purchase of 50,000 kilograms of materials for $249,250 ($4.985 per kg.)]     

Table (2)

DateAccount Title and ExplanationDebit ($)Credit ($)
 Work-in-process inventory$256,000 
  Direct materials usage variance (plug) $1,500
      Direct materials inventory $257,500
(Issued 51,500 kilograms of material to produce 6,400 equivalent units)

Table (3)

DateAccount Title and ExplanationDebit ($)Credit ($)
 Work-in-process inventory$677,040 
        Direct labor rate variance$64,300
        Direct labor efficiency  variance $12,740
       Accrued payroll$600,000
(To record direct labor wages and standard direct labor cost incurred to manufacture 6,200 equivalent units)

Table (3)

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