Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 7, Problem 7.30E
Materials and manufacturing labor variances,
| Standards per Chair | |
| Direct materials | 3 square yards of input at $5.50 per square yard |
| Direct manufacturing labor | 0.5 hour of input at $10.50 per hour |
The following data were compiled regarding actual performance, actual output units (chairs) produced, 2,200; square yards of input purchased and used, 6,200; price per square yard, $5.70; direct
- 1. Show computations of price and efficiency variances for direct materials and direct manufacturing labor. Give a plausible explanation of why each variance occurred.
- 2. Suppose 8,700 square yards of materials were purchased (at $5.70 per square yard), even though only 6,200 square yards were used. Suppose further that variances are identified at their most timely control point; accordingly, direct materials price variances are isolated and traced at the time of purchase to the purchasing department rather than to the production department. Compute the price and efficiency variances under this approach.
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Dunn, Inc., is a privately held furniture manufacturer. For August 2018, Dunn had the following standards for one of its products, a wicker chair:
Standards per Chair
Direct materials 2 square yards of input at $5 per square yard
Direct manufacturing labor 0.5 hour of input at $10 per hour
The following data were compiled regarding actual performance:
actual output units (chairs) produced, 2,000;
square yards of input purchased and used, 3,700;
price per square yard, $5.10;
direct manufacturing labor costs, $8,820;
actual hours of input, 900;
labor price per hour, $9.80.
REQUIREMENTS:
1. Show computations of price and efficiency…
Horace Company manufactures a professional-grade vacuum cleaner and began operations in 2017. For 2017, Horace budgeted to produce and sell 25,000 units. The company had no price, spending, or efficiency variances and writes off production-volume variance to cost of goods sold. Actual data for 2017 are given in attatched picture:
Q.Prepare a 2017 income statement for Horace Company using variable costing.
Dawson, Inc., is a privately held furniture manufacturer. For August 2017, Dawson had the following standards for one of its products, a wicker chair:
-- Standards per Chair --
Direct materials 3 square yards of input at $5.50 per square yard
Direct manufacturing labor 0.5 hour of input at $10.50 per hour
The following data were compiled regarding actual performance: actual output units (chairs) produced, 2,200; square yards of input purchased and used, 6,200; price per square yard, $5.70; direct manufacturing labor costs, $9,844; actual hours of input, 920; labor price per hour, $10.70.
Q. Show computations of price and efficiency variances for direct materials and direct…
Chapter 7 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
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
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- Dawson, Inc., is a privately held furniture manufacturer. For August 2017, Dawson had the following standards for one of its products, a wicker chair: -- Standards per Chair -- Direct materials 3 square yards of input at $5.50 per square yard Direct manufacturing labor 0.5 hour of input at $10.50 per hour The following data were compiled regarding actual performance: actual output units (chairs) produced, 2,200; square yards of input purchased and used, 6,200; price per square yard, $5.70; direct manufacturing labor costs, $9,844; actual hours of input, 920; labor price per hour, $10.70. Q. Suppose 8,700 square yards of materials were purchased (at $5.70 per square yard), even though only 6,200 square yards were used.…arrow_forwardCompute Greenspace Company’s gross margin for its first year of operationarrow_forwardGood Deal, Inc. uses a standard cost system and provides the following information. Good Deal allocates manufacturing overhead to production based on standard direct labor hours. Good Deal reported the following actual results for 2024: actual number of units produced, 1,000; actual variable overhead, $5,000; actual fixed overhead, $3,400; actual direct labor hours, 1,900. Requirement 1. Compute the variable overhead cost and efficiency variances and fixed overhead cost and volume variances. Show all computations. Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identify whether each variance is favorable (F) or unfavorable (U).(Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity; VOH = variable overhead.) Data table has the following Static budget variable…arrow_forward
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