Determine the standard cost per wheel 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 27PSB

a)

To determine

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

a)

Expert Solution

Explanation of Solution

Compute the standard cost per wheel:

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 1

Table (1)

Excel spread sheet:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 2

Table (2)

b)

To determine

Determine the total standard cost per wheel

b)

Expert Solution

Explanation of Solution

Compute the standard cost per wheel:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 3

Table (3)

Hence, the total standard per wheel is $138.

c)

To determine

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

c)

Expert Solution

Explanation of Solution

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

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 4

Table (4)

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 5

Table (5)

d)

To determine

Determine the total actual cost per wheel

d)

Expert Solution

Explanation of Solution

Compute the total actual cost per wheel:

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 6

Table (6)

Excel spread sheet:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 7

Table (7)

Hence, the total standard per wheel is $131.42.

e)

To determine

Determine the usage and price variances for direct materials and direct labor and the variance Company S has to investigate and discuss the labor usage 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=|($468,00030,000−$15.00)|×30,000=$18,000

Hence, the material price variance is $18,000 which is an unfavorable variance.

Materials usage variance=|(Actual quantity−Standard quantity)|×Standard price=|(30,000−2×14,400)|×$15=|(30,000−28,800)|×$15=$18,000

Hence, the material usage variance is $18,000 which is a unfavorable variance.

Compute the price and usage variance for direct labor:

Labor price variance=|(Actual price−Standard price)|×Actual hours=|($33.60−$32.00)|×(2.2×14,400)=$50,688

Hence, the labor price variance is $50,688 which is a favorable variance.

Labor usage variance=|(Actual hours−Standard hours)|×Standard price=|(31,680−(2.5×14,400))|×$32=$138,240

Hence, the labor usage variance is $138,240 which is a favorable variance.

The variance Company G has to investigate and discuss the labor usage 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.

The favorable labor usage variance is the result of using more costly and experienced work force which results in the unfavorable labor price variance. Other causes are effective planning to decrease the labor waste, or superior supervision and high morale.

f)

To determine

Determine the fixed cost spending and volume variances:

f)

Expert Solution

Explanation of Solution

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

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 8

Table (8)

Hence, the spending variance is $24,000 which is unfavorable variance.

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 9

Table (9)

Hence, the volume variance is $67,200 which is favorable variance.

As more units are produced than budgeted the favorable variance occurs. The unfavorable fixed cost spending variance denotes that more was spend for fixed overheads than the planned one.

Thus, the cost per unit was less than the budgeted fixed overheads.

Profits will be more when units are produced more as the costs are fixed.

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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 27PSB

a)

To determine

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

a)

Expert Solution

Explanation of Solution

Compute the standard cost per wheel:

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 1

Table (1)

Excel spread sheet:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 2

Table (2)

b)

To determine

Determine the total standard cost per wheel

b)

Expert Solution

Explanation of Solution

Compute the standard cost per wheel:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 3

Table (3)

Hence, the total standard per wheel is $138.

c)

To determine

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

c)

Expert Solution

Explanation of Solution

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

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 4

Table (4)

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 5

Table (5)

d)

To determine

Determine the total actual cost per wheel

d)

Expert Solution

Explanation of Solution

Compute the total actual cost per wheel:

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 6

Table (6)

Excel spread sheet:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 7

Table (7)

Hence, the total standard per wheel is $131.42.

e)

To determine

Determine the usage and price variances for direct materials and direct labor and the variance Company S has to investigate and discuss the labor usage 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=|($468,00030,000−$15.00)|×30,000=$18,000

Hence, the material price variance is $18,000 which is an unfavorable variance.

Materials usage variance=|(Actual quantity−Standard quantity)|×Standard price=|(30,000−2×14,400)|×$15=|(30,000−28,800)|×$15=$18,000

Hence, the material usage variance is $18,000 which is a unfavorable variance.

Compute the price and usage variance for direct labor:

Labor price variance=|(Actual price−Standard price)|×Actual hours=|($33.60−$32.00)|×(2.2×14,400)=$50,688

Hence, the labor price variance is $50,688 which is a favorable variance.

Labor usage variance=|(Actual hours−Standard hours)|×Standard price=|(31,680−(2.5×14,400))|×$32=$138,240

Hence, the labor usage variance is $138,240 which is a favorable variance.

The variance Company G has to investigate and discuss the labor usage 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.

The favorable labor usage variance is the result of using more costly and experienced work force which results in the unfavorable labor price variance. Other causes are effective planning to decrease the labor waste, or superior supervision and high morale.

f)

To determine

Determine the fixed cost spending and volume variances:

f)

Expert Solution

Explanation of Solution

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

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 8

Table (8)

Hence, the spending variance is $24,000 which is unfavorable variance.

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 9

Table (9)

Hence, the volume variance is $67,200 which is favorable variance.

As more units are produced than budgeted the favorable variance occurs. The unfavorable fixed cost spending variance denotes that more was spend for fixed overheads than the planned one.

Thus, the cost per unit was less than the budgeted fixed overheads.

Profits will be more when units are produced more as the costs are fixed.

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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 27PSB

a)

To determine

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

a)

Expert Solution

Explanation of Solution

Compute the standard cost per wheel:

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 1

Table (1)

Excel spread sheet:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 2

Table (2)

b)

To determine

Determine the total standard cost per wheel

b)

Expert Solution

Explanation of Solution

Compute the standard cost per wheel:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 3

Table (3)

Hence, the total standard per wheel is $138.

c)

To determine

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

c)

Expert Solution

Explanation of Solution

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

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 4

Table (4)

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 5

Table (5)

d)

To determine

Determine the total actual cost per wheel

d)

Expert Solution

Explanation of Solution

Compute the total actual cost per wheel:

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 6

Table (6)

Excel spread sheet:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 7

Table (7)

Hence, the total standard per wheel is $131.42.

e)

To determine

Determine the usage and price variances for direct materials and direct labor and the variance Company S has to investigate and discuss the labor usage 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=|($468,00030,000−$15.00)|×30,000=$18,000

Hence, the material price variance is $18,000 which is an unfavorable variance.

Materials usage variance=|(Actual quantity−Standard quantity)|×Standard price=|(30,000−2×14,400)|×$15=|(30,000−28,800)|×$15=$18,000

Hence, the material usage variance is $18,000 which is a unfavorable variance.

Compute the price and usage variance for direct labor:

Labor price variance=|(Actual price−Standard price)|×Actual hours=|($33.60−$32.00)|×(2.2×14,400)=$50,688

Hence, the labor price variance is $50,688 which is a favorable variance.

Labor usage variance=|(Actual hours−Standard hours)|×Standard price=|(31,680−(2.5×14,400))|×$32=$138,240

Hence, the labor usage variance is $138,240 which is a favorable variance.

The variance Company G has to investigate and discuss the labor usage 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.

The favorable labor usage variance is the result of using more costly and experienced work force which results in the unfavorable labor price variance. Other causes are effective planning to decrease the labor waste, or superior supervision and high morale.

f)

To determine

Determine the fixed cost spending and volume variances:

f)

Expert Solution

Explanation of Solution

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

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 8

Table (8)

Hence, the spending variance is $24,000 which is unfavorable variance.

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 9

Table (9)

Hence, the volume variance is $67,200 which is favorable variance.

As more units are produced than budgeted the favorable variance occurs. The unfavorable fixed cost spending variance denotes that more was spend for fixed overheads than the planned one.

Thus, the cost per unit was less than the budgeted fixed overheads.

Profits will be more when units are produced more as the costs are fixed.

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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 27PSB

a)

To determine

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

a)

Expert Solution

Explanation of Solution

Compute the standard cost per wheel:

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 1

Table (1)

Excel spread sheet:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 2

Table (2)

b)

To determine

Determine the total standard cost per wheel

b)

Expert Solution

Explanation of Solution

Compute the standard cost per wheel:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 3

Table (3)

Hence, the total standard per wheel is $138.

c)

To determine

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

c)

Expert Solution

Explanation of Solution

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

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 4

Table (4)

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 5

Table (5)

d)

To determine

Determine the total actual cost per wheel

d)

Expert Solution

Explanation of Solution

Compute the total actual cost per wheel:

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 6

Table (6)

Excel spread sheet:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 7

Table (7)

Hence, the total standard per wheel is $131.42.

e)

To determine

Determine the usage and price variances for direct materials and direct labor and the variance Company S has to investigate and discuss the labor usage 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=|($468,00030,000−$15.00)|×30,000=$18,000

Hence, the material price variance is $18,000 which is an unfavorable variance.

Materials usage variance=|(Actual quantity−Standard quantity)|×Standard price=|(30,000−2×14,400)|×$15=|(30,000−28,800)|×$15=$18,000

Hence, the material usage variance is $18,000 which is a unfavorable variance.

Compute the price and usage variance for direct labor:

Labor price variance=|(Actual price−Standard price)|×Actual hours=|($33.60−$32.00)|×(2.2×14,400)=$50,688

Hence, the labor price variance is $50,688 which is a favorable variance.

Labor usage variance=|(Actual hours−Standard hours)|×Standard price=|(31,680−(2.5×14,400))|×$32=$138,240

Hence, the labor usage variance is $138,240 which is a favorable variance.

The variance Company G has to investigate and discuss the labor usage 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.

The favorable labor usage variance is the result of using more costly and experienced work force which results in the unfavorable labor price variance. Other causes are effective planning to decrease the labor waste, or superior supervision and high morale.

f)

To determine

Determine the fixed cost spending and volume variances:

f)

Expert Solution

Explanation of Solution

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

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 8

Table (8)

Hence, the spending variance is $24,000 which is unfavorable variance.

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 9

Table (9)

Hence, the volume variance is $67,200 which is favorable variance.

As more units are produced than budgeted the favorable variance occurs. The unfavorable fixed cost spending variance denotes that more was spend for fixed overheads than the planned one.

Thus, the cost per unit was less than the budgeted fixed overheads.

Profits will be more when units are produced more as the costs are fixed.

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

Answer 5

Chapter 8, Problem 27PSB

a)

To determine

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

a)

Expert Solution

Explanation of Solution

Compute the standard cost per wheel:

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 1

Table (1)

Excel spread sheet:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 2

Table (2)

b)

To determine

Determine the total standard cost per wheel

b)

Expert Solution

Explanation of Solution

Compute the standard cost per wheel:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 3

Table (3)

Hence, the total standard per wheel is $138.

c)

To determine

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

c)

Expert Solution

Explanation of Solution

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

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 4

Table (4)

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 5

Table (5)

d)

To determine

Determine the total actual cost per wheel

d)

Expert Solution

Explanation of Solution

Compute the total actual cost per wheel:

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 6

Table (6)

Excel spread sheet:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 7

Table (7)

Hence, the total standard per wheel is $131.42.

e)

To determine

Determine the usage and price variances for direct materials and direct labor and the variance Company S has to investigate and discuss the labor usage 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=|($468,00030,000−$15.00)|×30,000=$18,000

Hence, the material price variance is $18,000 which is an unfavorable variance.

Materials usage variance=|(Actual quantity−Standard quantity)|×Standard price=|(30,000−2×14,400)|×$15=|(30,000−28,800)|×$15=$18,000

Hence, the material usage variance is $18,000 which is a unfavorable variance.

Compute the price and usage variance for direct labor:

Labor price variance=|(Actual price−Standard price)|×Actual hours=|($33.60−$32.00)|×(2.2×14,400)=$50,688

Hence, the labor price variance is $50,688 which is a favorable variance.

Labor usage variance=|(Actual hours−Standard hours)|×Standard price=|(31,680−(2.5×14,400))|×$32=$138,240

Hence, the labor usage variance is $138,240 which is a favorable variance.

The variance Company G has to investigate and discuss the labor usage 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.

The favorable labor usage variance is the result of using more costly and experienced work force which results in the unfavorable labor price variance. Other causes are effective planning to decrease the labor waste, or superior supervision and high morale.

f)

To determine

Determine the fixed cost spending and volume variances:

f)

Expert Solution

Explanation of Solution

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

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 8

Table (8)

Hence, the spending variance is $24,000 which is unfavorable variance.

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 9

Table (9)

Hence, the volume variance is $67,200 which is favorable variance.

As more units are produced than budgeted the favorable variance occurs. The unfavorable fixed cost spending variance denotes that more was spend for fixed overheads than the planned one.

Thus, the cost per unit was less than the budgeted fixed overheads.

Profits will be more when units are produced more as the costs are fixed.

Answer 6

Chapter 8, Problem 27PSB

a)

To determine

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

a)

Expert Solution

Explanation of Solution

Compute the standard cost per wheel:

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 1

Table (1)

Excel spread sheet:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 2

Table (2)

Answer 7

Chapter 8, Problem 27PSB

a)

To determine

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

Answer 8

a)

Expert Solution

Explanation of Solution

Compute the standard cost per wheel:

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 1

Table (1)

Excel spread sheet:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , 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 wheel

b)

Expert Solution

Explanation of Solution

Compute the standard cost per wheel:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 3

Table (3)

Hence, the total standard per wheel is $138.

Answer 13

b)

To determine

Determine the total standard cost per wheel

Answer 14

b)

Expert Solution

Explanation of Solution

Compute the standard cost per wheel:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 3

Table (3)

Hence, the total standard per wheel is $138.

Answer 15

b)

Expert Solution

Answer 16

b)

Expert Solution

Answer 17

Expert Solution

Answer 18

c)

To determine

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

c)

Expert Solution

Explanation of Solution

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

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 4

Table (4)

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 5

Table (5)

Answer 19

c)

To determine

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

Answer 20

c)

Expert Solution

Explanation of Solution

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

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 4

Table (4)

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 5

Table (5)

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 wheel

d)

Expert Solution

Explanation of Solution

Compute the total actual cost per wheel:

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 6

Table (6)

Excel spread sheet:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 7

Table (7)

Hence, the total standard per wheel is $131.42.

Answer 25

d)

To determine

Determine the total actual cost per wheel

Answer 26

d)

Expert Solution

Explanation of Solution

Compute the total actual cost per wheel:

Excel workings:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 6

Table (6)

Excel spread sheet:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 7

Table (7)

Hence, the total standard per wheel is $131.42.

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 S has to investigate and discuss the labor usage 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=|($468,00030,000−$15.00)|×30,000=$18,000

Hence, the material price variance is $18,000 which is an unfavorable variance.

Materials usage variance=|(Actual quantity−Standard quantity)|×Standard price=|(30,000−2×14,400)|×$15=|(30,000−28,800)|×$15=$18,000

Hence, the material usage variance is $18,000 which is a unfavorable variance.

Compute the price and usage variance for direct labor:

Labor price variance=|(Actual price−Standard price)|×Actual hours=|($33.60−$32.00)|×(2.2×14,400)=$50,688

Hence, the labor price variance is $50,688 which is a favorable variance.

Labor usage variance=|(Actual hours−Standard hours)|×Standard price=|(31,680−(2.5×14,400))|×$32=$138,240

Hence, the labor usage variance is $138,240 which is a favorable variance.

The variance Company G has to investigate and discuss the labor usage 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.

The favorable labor usage variance is the result of using more costly and experienced work force which results in the unfavorable labor price variance. Other causes are effective planning to decrease the labor waste, or superior supervision and high morale.

Answer 31

e)

To determine

Determine the usage and price variances for direct materials and direct labor and the variance Company S has to investigate and discuss the labor usage 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=|($468,00030,000−$15.00)|×30,000=$18,000

Hence, the material price variance is $18,000 which is an unfavorable variance.

Materials usage variance=|(Actual quantity−Standard quantity)|×Standard price=|(30,000−2×14,400)|×$15=|(30,000−28,800)|×$15=$18,000

Hence, the material usage variance is $18,000 which is a unfavorable variance.

Compute the price and usage variance for direct labor:

Labor price variance=|(Actual price−Standard price)|×Actual hours=|($33.60−$32.00)|×(2.2×14,400)=$50,688

Hence, the labor price variance is $50,688 which is a favorable variance.

Labor usage variance=|(Actual hours−Standard hours)|×Standard price=|(31,680−(2.5×14,400))|×$32=$138,240

Hence, the labor usage variance is $138,240 which is a favorable variance.

The variance Company G has to investigate and discuss the labor usage 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.

The favorable labor usage variance is the result of using more costly and experienced work force which results in the unfavorable labor price variance. Other causes are effective planning to decrease the labor waste, or superior supervision and high morale.

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 spending variance and identify whether it is unfavorable or favorable:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 8

Table (8)

Hence, the spending variance is $24,000 which is unfavorable variance.

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 9

Table (9)

Hence, the volume variance is $67,200 which is favorable variance.

As more units are produced than budgeted the favorable variance occurs. The unfavorable fixed cost spending variance denotes that more was spend for fixed overheads than the planned one.

Thus, the cost per unit was less than the budgeted fixed overheads.

Profits will be more when units are produced more as the costs are fixed.

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 spending variance and identify whether it is unfavorable or favorable:

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 8

Table (8)

Hence, the spending variance is $24,000 which is unfavorable variance.

Fundamental Managerial Accounting Concepts, Chapter 8, Problem 27PSB , additional homework tip 9

Table (9)

Hence, the volume variance is $67,200 which is favorable variance.

As more units are produced than budgeted the favorable variance occurs. The unfavorable fixed cost spending variance denotes that more was spend for fixed overheads than the planned one.

Thus, the cost per unit was less than the budgeted fixed overheads.

Profits will be more when units are produced more as the costs are fixed.