HORNGRENS COST ACCOUNTING W/ACCESS
16th Edition
ISBN: 9781323687604
Author: Datar
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 7, Problem 7.29E
Price and efficiency variances,
| Direct materials: 10 lb. at $4.50 per lb. | $45.00 |
| Direct manufacturing labor: 0.5 hour at $30 per hour | 15.00 |
The number of finished units budgeted for January 2017 was 10,000; 9,850 units were actually produced. Actual results in January 2017 were as follows:
| Direct materials: 98,055 lb. used | |
| Direct manufacturing labor: 4,900 hours | $154,350 |
Assume that there was no beginning inventory of either direct materials or finished units.
During the month, materials purchased amounted to 100,000 lb., at a total cost of $465,000. Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage.
- 1. Compute the January 2017 price and efficiency variances of direct materials and direct manufacturing labor.
- 2. Prepare journal entries to record the variances in requirement 1.
- 3. Comment on the January 2017 price and efficiency variances of Schuyler Corporation.
- 4. Why might Schuyler calculate direct materials price variances and direct materials efficiency variances with reference to different points in time?
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Compute Greenspace Company’s gross margin for its first year of operation
- The Sullivan Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor:
standard:
Direct materials: 10 lb. at $4.90 per lb.
Direct manufacturing labor:0.5 hour at $30 per hour
$49.00
15.00
The number of finished units budgeted for January 2020 was 9,940; 9,900 units were actually produced.
Actual data: Actual results in January 2020 were as follows:
Direct materials: 97,500 lb. used
Direct manufacturing labor: 4,900 hours
$155,575
Cool Car Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2014 are as follows:
The selling price per vehicle is $29,000. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 500 units. There are no price, efficiency, or spending variances. Any production-volume variance is written off to cost of goods sold in the month in which it occurs.
Requirements:
Prepare April and May 2014 income statements for Cool Car Motors under (a) variable costing and (b) absorption costing.
Prepare a numerical reconciliation and explanation of the difference between operating income for each month under variable costing and absorption costing.
Chapter 7 Solutions
HORNGRENS COST ACCOUNTING W/ACCESS
Ch. 7 - What is the relationship between management by...Ch. 7 - What are two possible sources of information a...Ch. 7 - Distinguish between a favorable variance and an...Ch. 7 - What is the key difference between a static budget...Ch. 7 - Why might managers find a flexible-budget analysis...Ch. 7 - Describe the steps in developing a flexible...Ch. 7 - List four reasons for using standard costs.Ch. 7 - How might a manager gain insight into the causes...Ch. 7 - List three causes of a favorable direct materials...Ch. 7 - Describe three reasons for an unfavorable direct...
Ch. 7 - How does variance analysis help in continuous...Ch. 7 - Why might an analyst examining variances in the...Ch. 7 - Prob. 7.13QCh. 7 - When inputs are substitutable, how can the direct...Ch. 7 - Benchmarking against other companies enables a...Ch. 7 - Metal Shelf Companys standard cost for raw...Ch. 7 - All of the following statements regarding...Ch. 7 - Amalgamated Manipulation Manufacturings (AMM)...Ch. 7 - Atlantic Company has a manufacturing facility in...Ch. 7 - Basix Inc. calculates direct manufacturing labor...Ch. 7 - Flexible budget. Sweeney Enterprises manufactures...Ch. 7 - Flexible budget. Bryant Companys budgeted prices...Ch. 7 - Flexible-budget preparation and analysis. Bank...Ch. 7 - Flexible budget, working backward. The Clarkson...Ch. 7 - Flexible-budget and sales volume variances....Ch. 7 - Price and efficiency variances. Sunshine Foods...Ch. 7 - Materials and manufacturing labor variances....Ch. 7 - Direct materials and direct manufacturing labor...Ch. 7 - Price and efficiency variances, journal entries....Ch. 7 - Materials and manufacturing labor variances,...Ch. 7 - Journal entries and T-accounts (continuation of...Ch. 7 - Price and efficiency variances, benchmarking....Ch. 7 - Static and flexible budgets, service sector....Ch. 7 - Flexible budget, direct materials, and direct...Ch. 7 - Variance analysis, nonmanufacturing setting. Joyce...Ch. 7 - Comprehensive variance analysis review. Ellis...Ch. 7 - Possible causes for price and efficiency...Ch. 7 - Material-cost variances, use of variances for...Ch. 7 - Direct manufacturing labor and direct materials...Ch. 7 - Direct materials efficiency, mix, and yield...Ch. 7 - Direct materials and manufacturing labor...Ch. 7 - Direct materials and manufacturing labor...Ch. 7 - Use of materials and manufacturing labor variances...Ch. 7 - Direct manufacturing labor variances: price,...Ch. 7 - Direct-cost and selling price variances. MicroDisk...Ch. 7 - Variances in the service sector. Derek Wilson...Ch. 7 - Prob. 7.47P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Listed below are the budgeted factory overhead costs for 2011 for Moss Industries at a projected level of 2,000 units: Required: Prepare flexible budgets for factory overhead at the 1,000, 2,000, and 4,000 unit levels. (Hint: You must first decide which of the listed costs should be considered variable and which should be fixed.)arrow_forwardCool Car Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2018 are provided. (Click to view the data.) The selling price per vehicle is $28,000. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 500 units. There are no price, efficiency, or rate variances. Any production-volume variance is written off to COGS in the month in which it occurs. Required 1. Prepare April and May 2018 statements of comprehensive income for Cool Car Motors under (a) variable costing and (b) absorption costing. 2. Prepare a numerical reconciliation and explanation of the difference between operating income for each month under variable costing and absorption costing. Requirement 1a. Prepare April and May 2018 statements of comprehensive income for Cool Car Motors under variable costing. Complete the top half of the statement of comprehensive income for each month first, and then complete the bottom…arrow_forwardAns the followingarrow_forward
- rice and efficiency variances (15 points). The Schuyler Corporation manufactures lamps. It has set upthe following standards per finished unit for direct materials and direct manufacturing labor:Direct materials: 10 lb. at $4.50 per lb. $45.00Direct manufacturing labor: 0.5 hour at $30 per hour 15.00The number of finished units budgeted for January 2017 was 10,000; 9,850 units were actually produced.Actual results in January 2017 were as follows:Direct materials: 98,055 lb. usedDirect manufacturing labor: 4,900 hours $154,350Assume that there was no beginning inventory of either direct materials or finished units.During the month, materials purchased amounted to 100,000 lb., at a total cost of $465,000. Input pricevariances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage.Required:1. Compute the January 2017 price and efficiency variances of direct materials and direct manufacturing labor.arrow_forwardDuvet Company manufactures pillows. The 2017 operating budget was based on production of 25,000 pillows, with 0.75 machine-hours allowed per pillow. Budgeted variable overhead per hour was $25. Actual production for 2017 was 27,000 pillows using 19,050 machine-hours. Actual variable costs were $23 per machine-hour. Calculate the following: a. the budgeted variable overhead for 2017; b. the variable overhead spending variance; and c. the variable overhead efficiency variance.arrow_forwardTempus, Inc. manufactures clocks and uses a standard costing system. Tempus uses direct labor-hours to allocate fixed overhead. Here are the company's data regarding budgeted and actual fixed overhead for 2020: Actual Static Budget Output (in units = clocks) 500,000 units 480,000 units Total direct labor hours (DLH) 240,000 DLH Total fixed overhead costs $756,000 $720,000 A. Calculate all fixed overhead variances and any overapplied or underapplied fixed overhead. Show all answers and well-labeled supporting calculations on the worksheet. B. Record journal entries for all fixed overhead activity for the year, including recording the variances and the required closing journal entries at year-end. Use the blank general journal on page 3 of the worksheet.arrow_forward
- Can you answer this accounting question?arrow_forwardBondi Corporation makes automotive engines. For the most recent month, budgeted production was 3,500 engines. The standard power cost is $1.50 per machine-hour. The company's standards indicate that each engine requires 11.3 machine-hours. Actual production was 3,800 engines. Actual machine-hours were 41,340 machine-hours. Actual power cost totaled $66,642. Required: Determine the rate and efficiency variances for the variable overhead item power cost and indicate whether those variances are unfavorable or favorable. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Variable Overhead Rate Variance : ? Variable Overhead efficiency Variance: ?arrow_forwardCorporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March 2017 are as follows: The selling price per unit is $2,800. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 1,250 units. There are no price, efficiency, or spending variances. Any production-volume variance is written off to cost of goods sold in the month in which it occurs. 1. Prepare income statements for HD in January, February, and March 2017 under (a) variable costing and (b) absorption costing. 2. Explain the difference in operating income for January, February, and March under variable costing and absorption costing.arrow_forward
- Graphs and overhead variances. Best Around, Inc., is a manufacturer of vacuums and uses standard costing. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of budgeted machine-hours. In 2017, budgeted fixed manufacturing overhead cost was $17,000,000. Budgeted variable manufacturing overhead was $10 per machine-hour. The denominator level was 1,000,000 machine-hours.arrow_forwardQuestion 1: The national Corporation manufactures lamps. It has set up the following standards finished unit for direct materials and direct manufacturing labor: per Direct materials: 10 lb. at $4.50 per Ib. Direct manufacturing labor: 0.5 hour at $30 per hour $45.00 15.00 The number of finished units budgeted for January 2017 was 10,000; 9,850 units were actually produced. Actual results in January 2017 were as follows: Direct materials: 98,055 lb. used Direct manufacturing labor: 4,900 hours $154,350 Assume that there was no beginning inventory of either direct materials or finished units. During the month, materials purchased amounted to 100,000 lb., at a total cost of $465,000. Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage. Required : Compute the January 2017 price and efficiency variances of direct materials and direct manufacturing labor.arrow_forwardEsquire Clothing is a manufacturer of d esigner suits. The cost of each suit is the sum of three variable costs (direct material costs, direct manufacturing labor costs, and manufacturing overhead costs) and one fixed-cost category (manufacturing overhead costs). Variable manufacturing overhead cost is allocated to each suit on the basis of budgeted direct manufacturing labor-hours per suit. For June 2017, each suit is budgeted to take 4 labor-hours. Budgeted variable manufacturing overhead cost per labor-hour is $12. The budgeted number of suits to be manufactured in June 2017 is 1,040. Actual variable manufacturing costs in June 2017 were $52,164 for 1,080 suits started and completed. There were no beginning or ending inventories of suits. Actual direct manufacturing labor-hours for June were 4,536. Q1. Compute the flexible-budget variance, the spending variance, and the efficiency variance for variable manufacturing overhead. Q2. Comment on the results.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY