FINAN.+MANAG.ACCT.-CONNECT ACCESS >C<
9th Edition
ISBN: 9781265610760
Author: Wild
Publisher: MCG CUSTOM
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Textbook Question
Chapter 21, Problem 6PSA
Problem 21-6AA Materials, labor, and
Boss Company’s
| Standard direct materials cost……………………………………………. | $ 100.000 |
| Direct materials quantity variance (unfavorable)……………………….. | 3.000 |
| Direct materials price variance (favorable) ……………………………….. | 500 |
| Actual direct labor cost ……………………………………………………. | 90.000 |
| Direct labor efficiency variance (favorable) ………………………………. | 7.000 |
| Direct labor rato variance (unfavorable). ………………………………….. | 1.200 |
| Actual overhead cost ………………………………………………………. | 375.000 |
| Volume variance (unfavorable) ……………………………………………. | 12.000 |
| Controllable variance (unfavorable)………………………………………….. | 9.000 |
Required
- Prepare December 31 journal entries to record the company’s costs and variances for the month. (Do not prepare the
journal entry to close the variances.) Check (1) Dr. Work in process Inventory (for overhead), $354.000
- Identify the variances that would attract the attention of a manager who uses management by exception. Explain what action (s) the manager should consider.
Analysis Component
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JH, Inc., is a calendar year, accrual basis corporation with Joe as its sole shareholder (basis in his stock is $90,000). On January 1 of the current year, JH Corporation has accumulated E & P of $200,000. Before considering the effect of the distribution described below, the corporation’s current E & P is $50,000. On November 1, JH distributes an office building to Joe. The office building has an adjusted basis of $80,000 (fair market value of $100,000) and is subject to a mortgage of $110,000. Assume that the building has been depreciated using the ADS method for both income tax and E & P purposes. What are the tax consequences of the distribution to JH and to Joe? (In your answer, be sure to describe the effects on taxable income for both JH and Joe, the impact of the distribution on JH’s E & P, and Joe’s basis in the building.)
Joe is the sole shareholder of JH Corporation. Joe sold his stock to Ethan on October 31 for $150,000. Joe’s basis in JH stock was $50,000 at the start of the year. JH distributed land to Joe immediately before the sale. JH’s basis in the land was $20,000 (fair market value of $25,000). On December 31, Ethan received a $75,000 cash distribution from JH. During the year, JH has $20,000 of current E & P and its accumulated E & P balance on January 1 is $10,000. Which of the following statements is true?
a. Joe recognizes a $110,000 gain on the sale of his stock. b. Joe recognizes a $100,000 gain on the sale of his stock. c. Ethan receives $5,000 of dividend income.d. Joe receives $20,000 of dividend income. e. None of the above.
Chapter 21 Solutions
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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