Determine the standard cost per candle for direct material, labor, and overhead

Question

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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 8, Problem 27PSA

a)

To determine

Determine the standard cost per candle for direct material, labor, and overhead

a)

Expert Solution

Explanation of Solution

Compute the standard cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 1

Table (1)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 2

Table (2)

b)

To determine

Determine the total standard cost per drip candle

b)

Expert Solution

Explanation of Solution

Compute the standard cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 3

Table (3)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 4

Table (4)

Hence, the total standard per drip candle is $28.32.

c)

To determine

Determine the actual cost per candle for direct materials, direct labor, and overhead.

c)

Expert Solution

Explanation of Solution

Determine the actual cost per candle for direct materials, direct labor, and overhead:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 5

Table (5)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 6

Table (6)

d)

To determine

Determine the total actual cost per drip candle

d)

Expert Solution

Explanation of Solution

Compute the total actual cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 7

Table (7)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 8

Table (8)

Hence, the total standard per drip candle is $29.30.

e)

To determine

Determine the usage and price variances for direct materials and direct labor and the variance Company R has to investigate and offer the causes for the variance.

e)

Expert Solution

Explanation of Solution

Compute the price and usage variance for direct material:

Materials price variances=|Actual price−Standard price|×Actual quantity=|$1.08−$1.20|×40,000=$4,800 Favorable

Hence, the material price variance is $4,800 which is a favorable variance that is actual price is less than the standard price.

Materials usage variance=|Actual quantity−Standard quantity|×Standard price=|40,000−38,400|×$1.20=$1,920 Unfavorable

Hence, the material usage variance is $1,920 which is an unfavorable variance that is actual quantity is less than the standard quantity.

Compute the price and usage variance for direct labor:

Labor price variance=|Actual price−Standard price|×Actual hours=|$15.00−$16.00|×26,400=$26,400

Hence, the labor price variance is $26,400 which is a favorable variance that is actual price is less than the standard price.

Labor usage variance =|Actual hours−Standard hours|×Standard price=|26,400−24,000|×$16=$38,400 Unfavorable

Hence, the labor usage variance is 38,400 which is an unfavorable variance that is actual hours is more than the standard hours.

The variance Company R has to investigate and offer the causes for the variance:

All the variance is need to be taken for investigation. Investigation must be based on the criteria’s like materiality, capacity to control, and frequency.

Favorable variance denotes that everything is good.

f)

To determine

Determine the fixed cost spending and volume variances:

f)

Expert Solution

Explanation of Solution

Determine the fixed cost volume variance and spending variance and identify whether it is unfavorable or favorable:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 9

Table (9)

Hence, the spending variance is $48,000 which is favorable variance.

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 10

Table (10)

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 11

Table (11)

Hence, the volume variance is $62,400 which is unfavorable variance.

The favorable fixed cost spending variance denotes that lesser amount was spend for the overheads than the planned or budgeted one. The unfavorable fixed cost volume variance denotes that very lesser units were produced than planned.

In order to lower the cost per unit the company should use the facilities to produce a high volume

If units were produced lesser than planned then the company will face underutilizing the facilities which indicates an unfavorable volume variance.

g)

To determine

The reason why the actual cost per unit and standard cost per unit differs by few cents

g)

Expert Solution

Explanation of Solution

The favorable usage and price variances are balance by the fact because the volume variances are unfavorable. Thus, the differences are very minimal.

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Students have asked these similar questions

False Value Hardware began 2013 with a credit balance of $31,900 in the allowance for sales returns account. Sales and cash collections from customers during the year were $680,000 and $640,000, respectively. False Value estimates that 5% of all sales will be returned. During 2013, customers returned merchandise for credit of $23,000 to their accounts. False Value's 2013 income statement would report net sales of: a. $657,000. b. $646,000. c. $648,100. d. $671,100.

Capitalisation method

Subject: financial accounting

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 8, Problem 27PSA

a)

To determine

Determine the standard cost per candle for direct material, labor, and overhead

a)

Expert Solution

Explanation of Solution

Compute the standard cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 1

Table (1)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 2

Table (2)

b)

To determine

Determine the total standard cost per drip candle

b)

Expert Solution

Explanation of Solution

Compute the standard cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 3

Table (3)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 4

Table (4)

Hence, the total standard per drip candle is $28.32.

c)

To determine

Determine the actual cost per candle for direct materials, direct labor, and overhead.

c)

Expert Solution

Explanation of Solution

Determine the actual cost per candle for direct materials, direct labor, and overhead:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 5

Table (5)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 6

Table (6)

d)

To determine

Determine the total actual cost per drip candle

d)

Expert Solution

Explanation of Solution

Compute the total actual cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 7

Table (7)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 8

Table (8)

Hence, the total standard per drip candle is $29.30.

e)

To determine

Determine the usage and price variances for direct materials and direct labor and the variance Company R has to investigate and offer the causes for the variance.

e)

Expert Solution

Explanation of Solution

Compute the price and usage variance for direct material:

Materials price variances=|Actual price−Standard price|×Actual quantity=|$1.08−$1.20|×40,000=$4,800 Favorable

Hence, the material price variance is $4,800 which is a favorable variance that is actual price is less than the standard price.

Materials usage variance=|Actual quantity−Standard quantity|×Standard price=|40,000−38,400|×$1.20=$1,920 Unfavorable

Hence, the material usage variance is $1,920 which is an unfavorable variance that is actual quantity is less than the standard quantity.

Compute the price and usage variance for direct labor:

Labor price variance=|Actual price−Standard price|×Actual hours=|$15.00−$16.00|×26,400=$26,400

Hence, the labor price variance is $26,400 which is a favorable variance that is actual price is less than the standard price.

Labor usage variance =|Actual hours−Standard hours|×Standard price=|26,400−24,000|×$16=$38,400 Unfavorable

Hence, the labor usage variance is 38,400 which is an unfavorable variance that is actual hours is more than the standard hours.

The variance Company R has to investigate and offer the causes for the variance:

All the variance is need to be taken for investigation. Investigation must be based on the criteria’s like materiality, capacity to control, and frequency.

Favorable variance denotes that everything is good.

f)

To determine

Determine the fixed cost spending and volume variances:

f)

Expert Solution

Explanation of Solution

Determine the fixed cost volume variance and spending variance and identify whether it is unfavorable or favorable:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 9

Table (9)

Hence, the spending variance is $48,000 which is favorable variance.

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 10

Table (10)

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 11

Table (11)

Hence, the volume variance is $62,400 which is unfavorable variance.

The favorable fixed cost spending variance denotes that lesser amount was spend for the overheads than the planned or budgeted one. The unfavorable fixed cost volume variance denotes that very lesser units were produced than planned.

In order to lower the cost per unit the company should use the facilities to produce a high volume

If units were produced lesser than planned then the company will face underutilizing the facilities which indicates an unfavorable volume variance.

g)

To determine

The reason why the actual cost per unit and standard cost per unit differs by few cents

g)

Expert Solution

Explanation of Solution

The favorable usage and price variances are balance by the fact because the volume variances are unfavorable. Thus, the differences are very minimal.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

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 8, Problem 27PSA

a)

To determine

Determine the standard cost per candle for direct material, labor, and overhead

a)

Expert Solution

Explanation of Solution

Compute the standard cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 1

Table (1)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 2

Table (2)

b)

To determine

Determine the total standard cost per drip candle

b)

Expert Solution

Explanation of Solution

Compute the standard cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 3

Table (3)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 4

Table (4)

Hence, the total standard per drip candle is $28.32.

c)

To determine

Determine the actual cost per candle for direct materials, direct labor, and overhead.

c)

Expert Solution

Explanation of Solution

Determine the actual cost per candle for direct materials, direct labor, and overhead:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 5

Table (5)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 6

Table (6)

d)

To determine

Determine the total actual cost per drip candle

d)

Expert Solution

Explanation of Solution

Compute the total actual cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 7

Table (7)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 8

Table (8)

Hence, the total standard per drip candle is $29.30.

e)

To determine

Determine the usage and price variances for direct materials and direct labor and the variance Company R has to investigate and offer the causes for the variance.

e)

Expert Solution

Explanation of Solution

Compute the price and usage variance for direct material:

Materials price variances=|Actual price−Standard price|×Actual quantity=|$1.08−$1.20|×40,000=$4,800 Favorable

Hence, the material price variance is $4,800 which is a favorable variance that is actual price is less than the standard price.

Materials usage variance=|Actual quantity−Standard quantity|×Standard price=|40,000−38,400|×$1.20=$1,920 Unfavorable

Hence, the material usage variance is $1,920 which is an unfavorable variance that is actual quantity is less than the standard quantity.

Compute the price and usage variance for direct labor:

Labor price variance=|Actual price−Standard price|×Actual hours=|$15.00−$16.00|×26,400=$26,400

Hence, the labor price variance is $26,400 which is a favorable variance that is actual price is less than the standard price.

Labor usage variance =|Actual hours−Standard hours|×Standard price=|26,400−24,000|×$16=$38,400 Unfavorable

Hence, the labor usage variance is 38,400 which is an unfavorable variance that is actual hours is more than the standard hours.

The variance Company R has to investigate and offer the causes for the variance:

All the variance is need to be taken for investigation. Investigation must be based on the criteria’s like materiality, capacity to control, and frequency.

Favorable variance denotes that everything is good.

f)

To determine

Determine the fixed cost spending and volume variances:

f)

Expert Solution

Explanation of Solution

Determine the fixed cost volume variance and spending variance and identify whether it is unfavorable or favorable:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 9

Table (9)

Hence, the spending variance is $48,000 which is favorable variance.

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 10

Table (10)

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 11

Table (11)

Hence, the volume variance is $62,400 which is unfavorable variance.

The favorable fixed cost spending variance denotes that lesser amount was spend for the overheads than the planned or budgeted one. The unfavorable fixed cost volume variance denotes that very lesser units were produced than planned.

In order to lower the cost per unit the company should use the facilities to produce a high volume

If units were produced lesser than planned then the company will face underutilizing the facilities which indicates an unfavorable volume variance.

g)

To determine

The reason why the actual cost per unit and standard cost per unit differs by few cents

g)

Expert Solution

Explanation of Solution

The favorable usage and price variances are balance by the fact because the volume variances are unfavorable. Thus, the differences are very minimal.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

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 8, Problem 27PSA

a)

To determine

Determine the standard cost per candle for direct material, labor, and overhead

a)

Expert Solution

Explanation of Solution

Compute the standard cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 1

Table (1)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 2

Table (2)

b)

To determine

Determine the total standard cost per drip candle

b)

Expert Solution

Explanation of Solution

Compute the standard cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 3

Table (3)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 4

Table (4)

Hence, the total standard per drip candle is $28.32.

c)

To determine

Determine the actual cost per candle for direct materials, direct labor, and overhead.

c)

Expert Solution

Explanation of Solution

Determine the actual cost per candle for direct materials, direct labor, and overhead:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 5

Table (5)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 6

Table (6)

d)

To determine

Determine the total actual cost per drip candle

d)

Expert Solution

Explanation of Solution

Compute the total actual cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 7

Table (7)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 8

Table (8)

Hence, the total standard per drip candle is $29.30.

e)

To determine

Determine the usage and price variances for direct materials and direct labor and the variance Company R has to investigate and offer the causes for the variance.

e)

Expert Solution

Explanation of Solution

Compute the price and usage variance for direct material:

Materials price variances=|Actual price−Standard price|×Actual quantity=|$1.08−$1.20|×40,000=$4,800 Favorable

Hence, the material price variance is $4,800 which is a favorable variance that is actual price is less than the standard price.

Materials usage variance=|Actual quantity−Standard quantity|×Standard price=|40,000−38,400|×$1.20=$1,920 Unfavorable

Hence, the material usage variance is $1,920 which is an unfavorable variance that is actual quantity is less than the standard quantity.

Compute the price and usage variance for direct labor:

Labor price variance=|Actual price−Standard price|×Actual hours=|$15.00−$16.00|×26,400=$26,400

Hence, the labor price variance is $26,400 which is a favorable variance that is actual price is less than the standard price.

Labor usage variance =|Actual hours−Standard hours|×Standard price=|26,400−24,000|×$16=$38,400 Unfavorable

Hence, the labor usage variance is 38,400 which is an unfavorable variance that is actual hours is more than the standard hours.

The variance Company R has to investigate and offer the causes for the variance:

All the variance is need to be taken for investigation. Investigation must be based on the criteria’s like materiality, capacity to control, and frequency.

Favorable variance denotes that everything is good.

f)

To determine

Determine the fixed cost spending and volume variances:

f)

Expert Solution

Explanation of Solution

Determine the fixed cost volume variance and spending variance and identify whether it is unfavorable or favorable:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 9

Table (9)

Hence, the spending variance is $48,000 which is favorable variance.

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 10

Table (10)

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 11

Table (11)

Hence, the volume variance is $62,400 which is unfavorable variance.

The favorable fixed cost spending variance denotes that lesser amount was spend for the overheads than the planned or budgeted one. The unfavorable fixed cost volume variance denotes that very lesser units were produced than planned.

In order to lower the cost per unit the company should use the facilities to produce a high volume

If units were produced lesser than planned then the company will face underutilizing the facilities which indicates an unfavorable volume variance.

g)

To determine

The reason why the actual cost per unit and standard cost per unit differs by few cents

g)

Expert Solution

Explanation of Solution

The favorable usage and price variances are balance by the fact because the volume variances are unfavorable. Thus, the differences are very minimal.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 8, Problem 27PSA

a)

To determine

Determine the standard cost per candle for direct material, labor, and overhead

a)

Expert Solution

Explanation of Solution

Compute the standard cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 1

Table (1)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 2

Table (2)

b)

To determine

Determine the total standard cost per drip candle

b)

Expert Solution

Explanation of Solution

Compute the standard cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 3

Table (3)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 4

Table (4)

Hence, the total standard per drip candle is $28.32.

c)

To determine

Determine the actual cost per candle for direct materials, direct labor, and overhead.

c)

Expert Solution

Explanation of Solution

Determine the actual cost per candle for direct materials, direct labor, and overhead:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 5

Table (5)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 6

Table (6)

d)

To determine

Determine the total actual cost per drip candle

d)

Expert Solution

Explanation of Solution

Compute the total actual cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 7

Table (7)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 8

Table (8)

Hence, the total standard per drip candle is $29.30.

e)

To determine

Determine the usage and price variances for direct materials and direct labor and the variance Company R has to investigate and offer the causes for the variance.

e)

Expert Solution

Explanation of Solution

Compute the price and usage variance for direct material:

Materials price variances=|Actual price−Standard price|×Actual quantity=|$1.08−$1.20|×40,000=$4,800 Favorable

Hence, the material price variance is $4,800 which is a favorable variance that is actual price is less than the standard price.

Materials usage variance=|Actual quantity−Standard quantity|×Standard price=|40,000−38,400|×$1.20=$1,920 Unfavorable

Hence, the material usage variance is $1,920 which is an unfavorable variance that is actual quantity is less than the standard quantity.

Compute the price and usage variance for direct labor:

Labor price variance=|Actual price−Standard price|×Actual hours=|$15.00−$16.00|×26,400=$26,400

Hence, the labor price variance is $26,400 which is a favorable variance that is actual price is less than the standard price.

Labor usage variance =|Actual hours−Standard hours|×Standard price=|26,400−24,000|×$16=$38,400 Unfavorable

Hence, the labor usage variance is 38,400 which is an unfavorable variance that is actual hours is more than the standard hours.

The variance Company R has to investigate and offer the causes for the variance:

All the variance is need to be taken for investigation. Investigation must be based on the criteria’s like materiality, capacity to control, and frequency.

Favorable variance denotes that everything is good.

f)

To determine

Determine the fixed cost spending and volume variances:

f)

Expert Solution

Explanation of Solution

Determine the fixed cost volume variance and spending variance and identify whether it is unfavorable or favorable:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 9

Table (9)

Hence, the spending variance is $48,000 which is favorable variance.

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 10

Table (10)

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 11

Table (11)

Hence, the volume variance is $62,400 which is unfavorable variance.

The favorable fixed cost spending variance denotes that lesser amount was spend for the overheads than the planned or budgeted one. The unfavorable fixed cost volume variance denotes that very lesser units were produced than planned.

In order to lower the cost per unit the company should use the facilities to produce a high volume

If units were produced lesser than planned then the company will face underutilizing the facilities which indicates an unfavorable volume variance.

g)

To determine

The reason why the actual cost per unit and standard cost per unit differs by few cents

g)

Expert Solution

Explanation of Solution

The favorable usage and price variances are balance by the fact because the volume variances are unfavorable. Thus, the differences are very minimal.

Answer 6

Chapter 8, Problem 27PSA

a)

To determine

Determine the standard cost per candle for direct material, labor, and overhead

a)

Expert Solution

Explanation of Solution

Compute the standard cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 1

Table (1)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 2

Table (2)

Answer 7

Chapter 8, Problem 27PSA

a)

To determine

Determine the standard cost per candle for direct material, labor, and overhead

Answer 8

a)

Expert Solution

Explanation of Solution

Compute the standard cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 1

Table (1)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 2

Table (2)

Answer 9

a)

Expert Solution

Answer 10

a)

Expert Solution

Answer 11

Expert Solution

Answer 12

b)

To determine

Determine the total standard cost per drip candle

b)

Expert Solution

Explanation of Solution

Compute the standard cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 3

Table (3)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 4

Table (4)

Hence, the total standard per drip candle is $28.32.

Answer 13

b)

To determine

Determine the total standard cost per drip candle

Answer 14

b)

Expert Solution

Explanation of Solution

Compute the standard cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 3

Table (3)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 4

Table (4)

Hence, the total standard per drip candle is $28.32.

Answer 15

b)

Expert Solution

Answer 16

b)

Expert Solution

Answer 17

Expert Solution

Answer 18

c)

To determine

Determine the actual cost per candle for direct materials, direct labor, and overhead.

c)

Expert Solution

Explanation of Solution

Determine the actual cost per candle for direct materials, direct labor, and overhead:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 5

Table (5)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 6

Table (6)

Answer 19

c)

To determine

Determine the actual cost per candle for direct materials, direct labor, and overhead.

Answer 20

c)

Expert Solution

Explanation of Solution

Determine the actual cost per candle for direct materials, direct labor, and overhead:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 5

Table (5)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 6

Table (6)

Answer 21

c)

Expert Solution

Answer 22

c)

Expert Solution

Answer 23

Expert Solution

Answer 24

d)

To determine

Determine the total actual cost per drip candle

d)

Expert Solution

Explanation of Solution

Compute the total actual cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 7

Table (7)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 8

Table (8)

Hence, the total standard per drip candle is $29.30.

Answer 25

d)

To determine

Determine the total actual cost per drip candle

Answer 26

d)

Expert Solution

Explanation of Solution

Compute the total actual cost per candle:

Excel workings:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 7

Table (7)

Excel spread sheet:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 8

Table (8)

Hence, the total standard per drip candle is $29.30.

Answer 27

d)

Expert Solution

Answer 28

d)

Expert Solution

Answer 29

Expert Solution

Answer 30

e)

To determine

Determine the usage and price variances for direct materials and direct labor and the variance Company R has to investigate and offer the causes for the variance.

e)

Expert Solution

Explanation of Solution

Compute the price and usage variance for direct material:

Materials price variances=|Actual price−Standard price|×Actual quantity=|$1.08−$1.20|×40,000=$4,800 Favorable

Hence, the material price variance is $4,800 which is a favorable variance that is actual price is less than the standard price.

Materials usage variance=|Actual quantity−Standard quantity|×Standard price=|40,000−38,400|×$1.20=$1,920 Unfavorable

Hence, the material usage variance is $1,920 which is an unfavorable variance that is actual quantity is less than the standard quantity.

Compute the price and usage variance for direct labor:

Labor price variance=|Actual price−Standard price|×Actual hours=|$15.00−$16.00|×26,400=$26,400

Hence, the labor price variance is $26,400 which is a favorable variance that is actual price is less than the standard price.

Labor usage variance =|Actual hours−Standard hours|×Standard price=|26,400−24,000|×$16=$38,400 Unfavorable

Hence, the labor usage variance is 38,400 which is an unfavorable variance that is actual hours is more than the standard hours.

The variance Company R has to investigate and offer the causes for the variance:

All the variance is need to be taken for investigation. Investigation must be based on the criteria’s like materiality, capacity to control, and frequency.

Favorable variance denotes that everything is good.

Answer 31

e)

To determine

Determine the usage and price variances for direct materials and direct labor and the variance Company R has to investigate and offer the causes for the variance.

Answer 32

e)

Expert Solution

Explanation of Solution

Compute the price and usage variance for direct material:

Materials price variances=|Actual price−Standard price|×Actual quantity=|$1.08−$1.20|×40,000=$4,800 Favorable

Hence, the material price variance is $4,800 which is a favorable variance that is actual price is less than the standard price.

Materials usage variance=|Actual quantity−Standard quantity|×Standard price=|40,000−38,400|×$1.20=$1,920 Unfavorable

Hence, the material usage variance is $1,920 which is an unfavorable variance that is actual quantity is less than the standard quantity.

Compute the price and usage variance for direct labor:

Labor price variance=|Actual price−Standard price|×Actual hours=|$15.00−$16.00|×26,400=$26,400

Hence, the labor price variance is $26,400 which is a favorable variance that is actual price is less than the standard price.

Labor usage variance =|Actual hours−Standard hours|×Standard price=|26,400−24,000|×$16=$38,400 Unfavorable

Hence, the labor usage variance is 38,400 which is an unfavorable variance that is actual hours is more than the standard hours.

The variance Company R has to investigate and offer the causes for the variance:

All the variance is need to be taken for investigation. Investigation must be based on the criteria’s like materiality, capacity to control, and frequency.

Favorable variance denotes that everything is good.

Answer 33

e)

Expert Solution

Answer 34

e)

Expert Solution

Answer 35

Expert Solution

Answer 36

f)

To determine

Determine the fixed cost spending and volume variances:

f)

Expert Solution

Explanation of Solution

Determine the fixed cost volume variance and spending variance and identify whether it is unfavorable or favorable:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 9

Table (9)

Hence, the spending variance is $48,000 which is favorable variance.

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 10

Table (10)

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 11

Table (11)

Hence, the volume variance is $62,400 which is unfavorable variance.

The favorable fixed cost spending variance denotes that lesser amount was spend for the overheads than the planned or budgeted one. The unfavorable fixed cost volume variance denotes that very lesser units were produced than planned.

In order to lower the cost per unit the company should use the facilities to produce a high volume

If units were produced lesser than planned then the company will face underutilizing the facilities which indicates an unfavorable volume variance.

Answer 37

f)

To determine

Determine the fixed cost spending and volume variances:

Answer 38

f)

Expert Solution

Explanation of Solution

Determine the fixed cost volume variance and spending variance and identify whether it is unfavorable or favorable:

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 9

Table (9)

Hence, the spending variance is $48,000 which is favorable variance.

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 10

Table (10)

Fundamental Managerial Accounting Concepts with Access, Chapter 8, Problem 27PSA , additional homework tip 11

Table (11)

Hence, the volume variance is $62,400 which is unfavorable variance.

The favorable fixed cost spending variance denotes that lesser amount was spend for the overheads than the planned or budgeted one. The unfavorable fixed cost volume variance denotes that very lesser units were produced than planned.

In order to lower the cost per unit the company should use the facilities to produce a high volume

If units were produced lesser than planned then the company will face underutilizing the facilities which indicates an unfavorable volume variance.

Answer 39

f)

Expert Solution

Answer 40

f)

Expert Solution

Answer 41

Expert Solution

Answer 42

g)

To determine

The reason why the actual cost per unit and standard cost per unit differs by few cents

g)

Expert Solution

Explanation of Solution

The favorable usage and price variances are balance by the fact because the volume variances are unfavorable. Thus, the differences are very minimal.

Answer 43

g)

To determine

The reason why the actual cost per unit and standard cost per unit differs by few cents

Answer 44

g)

Expert Solution

Explanation of Solution

The favorable usage and price variances are balance by the fact because the volume variances are unfavorable. Thus, the differences are very minimal.

Answer 45

g)

Expert Solution

Answer 46

g)

Expert Solution

Answer 47

Expert Solution

Answer 48

Ch. 8 - Prob. 1LO Ch. 8 - Prob. 2LO Ch. 8 - Prob. 3LO Ch. 8 - Prob. 4LO Ch. 8 - Prob. 5LO Ch. 8 - Prob. 6LO Ch. 8 - Prob. 1Q Ch. 8 - Prob. 2Q Ch. 8 - Prob. 3Q Ch. 8 - Prob. 4Q

Determine the standard cost per candle for direct material, labor, and overhead

Concept explainers

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Determine the standard cost per candle for direct material, labor, and overhead

Explanation of Solution

Determine the total standard cost per drip candle

Explanation of Solution

Determine the actual cost per candle for direct materials, direct labor, and overhead.

Explanation of Solution

Determine the total actual cost per drip candle

Explanation of Solution

Determine the usage and price variances for direct materials and direct labor and the variance Company R has to investigate and offer the causes for the variance.

Explanation of Solution

Determine the fixed cost spending and volume variances:

Explanation of Solution

The reason why the actual cost per unit and standard cost per unit differs by few cents

Explanation of Solution

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