Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Textbook Question
Chapter 8, Problem 2P
Materials and labor variances
Fausto Fabricators Inc. uses a
The following operating data came from the records for the month:
In process, beginning inventory, none.
In process, ending inventory, 800 units, 80% complete as to labor; material is issued at the beginning of processing.
Completed during the month, 5,600 units.
Materials issued to production were 51,680 lb @ $.55 per pound. Direct labor was $384,000 for 40,000 hours worked.
Required:
Calculate the following variances, using the diagram format in Figure 8-4.
- 1. Materials price.
- 2. Materials quantity.
- 3. Net materials variance.
- 4. Labor rate.
- 5. Labor efficiency.
- 6. Net labor variance.
(Hint: Before determining the standard quantity for materials and labor, you must first compute the equivalent units of production for materials and labor.)
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The following materials standards have been established for a particular product:
Standard quantity per unit of output
Standard price
5.1 meters
$17.90 per meter
The following data pertain to operations concerning the product for the last month:
Actual materials purchased
Actual cost of materials purchased
Actual materials used in production
Actual output
7,700 meters
$142,450
7,300 meters
1,400 units
What is the materials price variance for the month?
The following materials standards have been established for a particular product:
Standard quantity per unit of output
Standard price
4.5 meters
$18.80 per meter
The following data pertain to operations concerning the product for the last month:
Actual materials purchased
Actual cost of materials purchased
Actual materials used in production
Actual output
What is the materials price variance for the month?
Multiple Choice
$14,840 U
$8,700 U
$5,558 U
$8,400 U
8,000 meters
$ 158,800
7,300 meters
1,560 units
Standard Costing and Variance Analysis
Standard Price or Rate
P6.00 per meter
Direct Materials
Direct Labor
Variable Factory Overhead
P3.00 direct labor hour
per
Factory overhead is applied to production based on direct labor hours. During
the month of February, 5,000 units were produced and sold to customers. Th
following are the selected production data for the month:
Materials
Direct
Variable
used
Labor
FOH
P52,500
Standard Cost allowed
Actual cost incurred
P84,000
P75,000
P6,000 U
P21,000
P18,000
?
Materials Quantity variance
Actual direct labor hours
7,500 hours
Standard FOH rate per direct labor hour
Standard Price per meter
P3.00/hr.
P6.00 /m.
The difference between the standard and actual cost per unit produced is P0.15
favorable.
Required: Compute the following:
1. The standard cost per unit of product.
2. The actual cost per unit of product.
Standard Quantity per unit.
4. Material Price variance.
3.
5.
6. Labor Rate variance.
Standard direct labor rate per hour.
7. Labor…
Chapter 8 Solutions
Principles of Cost Accounting
Ch. 8 - How does a standard cost accounting system work,...Ch. 8 - What is the difference between the standard cost...Ch. 8 - Prob. 3QCh. 8 - What are the specific procedures on which a...Ch. 8 - How are standards for materials and labor costs...Ch. 8 - What is a variance?Ch. 8 - How do price and quantity variances relate to...Ch. 8 - How do rate and efficiency variances relate to...Ch. 8 - Prob. 9QCh. 8 - How does a materials purchase price variance...
Ch. 8 - Prob. 11QCh. 8 - Prob. 12QCh. 8 - When a company uses a standard cost system, are...Ch. 8 - What two factors must be considered when breaking...Ch. 8 - What might cause the following materials...Ch. 8 - What might cause the following labor variances?
An...Ch. 8 - Prob. 17QCh. 8 - Prob. 18QCh. 8 - Prob. 19QCh. 8 - Prob. 20QCh. 8 - When does a flexible-budget variance occur?
Ch. 8 - Why is it important to determine flexible-budget...Ch. 8 - Prob. 23QCh. 8 - What is the significance of a production-volume...Ch. 8 - If production is more or less than the standard...Ch. 8 - At the end of the current fiscal year, the trial...Ch. 8 - What variances from the four-variance method are...Ch. 8 - What is the primary difference between the...Ch. 8 - What are the four variances in the four-variance...Ch. 8 - In all of the exercises involving variances, use F...Ch. 8 - Prob. 2ECh. 8 - Prob. 3ECh. 8 - Prob. 4ECh. 8 - Prob. 5ECh. 8 - Computing materials variances D-List Calendar Co....Ch. 8 - Computing labor variances LIFT Inc. manufactures...Ch. 8 - Standard cost summary; materials and labor cost...Ch. 8 - Computing labor variances Fill in the missing...Ch. 8 - Standard unit cost and journal entries The normal...Ch. 8 - Making journal entries Assume that during the...Ch. 8 - Using variance analysis and interpretation Last...Ch. 8 - Using variance analysis and interpretation Last...Ch. 8 - Journalizing standard costs in two departments...Ch. 8 - Calculating factory overhead The standard capacity...Ch. 8 - Determining Budgeted Overhead The overhead...Ch. 8 - Calculating factory overhead: two variances Munoz...Ch. 8 - Calculating factory overhead: two variances...Ch. 8 - The normal capacity of a manufacturing plant is...Ch. 8 - Calculating amount of factory overhead applied to...Ch. 8 - Georgia Gasket Co. budgets 8,000 direct labor...Ch. 8 - (Appendix) Calculating factory overhead: four...Ch. 8 - (Appendix) Calculating factory overhead: three...Ch. 8 - Materials and labor variances Branca Inspections...Ch. 8 - Materials and labor variances Fausto Fabricators...Ch. 8 - Zippy Inc. manufactures a fuel additive, Surge,...Ch. 8 - Calculation of materials and labor variances
Fritz...Ch. 8 - High-End Products Inc. uses a standard cost system...Ch. 8 - RDI Products Co. manufactures a variety of...Ch. 8 - The standard cost summary for the most popular...Ch. 8 - Carlo Lee Corp. has established the following...Ch. 8 - USD Inc. has established the following standard...Ch. 8 - Allocation of variances
Costa Brava Manufacturing...Ch. 8 - On May 1, Athens Inc. began the manufacture of a...Ch. 8 - The standard specifications for an electric motor...Ch. 8 - Cardiff Inc. manufactures men’s sport shirts for...Ch. 8 - Fargo Co. manufactures products in batches of 100...Ch. 8 - Prob. 15PCh. 8 - (Appendix) Overhead variances—four variance
Mobile...Ch. 8 - Shinto Corp. uses a standard cost system and...Ch. 8 - Kamen Manufacturing Co. estimates the following...Ch. 8 - Prob. 19PCh. 8 - Jillian Manufacturing Inc. manufactures a single...Ch. 8 - Cost and production data for Binghamton Beverages...
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