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 8, Problem 8.43P
Comprehensive review of Chapters 7 and 8, working backward from given variances. The Gallo Company uses a flexible budget and standard costs to aid planning and control of its machining manufacturing operations. Its costing system for manufacturing has two direct-cost categories (direct materials and direct manufacturing labor—both variable) and two
At the 50,000 budgeted direct manufacturing labor-hour level for August, budgeted direct manufacturing labor is $1,250,000, budgeted variable manufacturing overhead is $500,000, and budgeted fixed manufacturing overhead is $1,000,000.
The following actual results are for August:
| Direct materials price variance (based on purchases) | $179,300 F |
| Direct materials efficiency variance | 75,900 U |
| Direct |
535,500 |
| Variable manufacturing overhead flexible- |
10,400 U |
| Variable manufacturing overhead efficiency variance | 18,100 U |
| Fixed manufacturing overhead incurred | 957,550 |
The
In July, labor unrest caused a major slowdown in the pace of production, resulting in an unfavorable direct manufacturing labor efficiency variance of $40,000. There was no direct manufacturing labor price variance. Labor unrest persisted into August. Some workers quit. Their replacements had to be hired at higher wage rates, which had to be extended to all workers. The actual average wage rate in August exceeded the standard average wage rate by $0.50 per hour.
- A. Compute the following for August:
Required
- a. Total pounds of direct materials purchased
- b. Total number of pounds of excess direct materials used
- c. Variable manufacturing overhead spending variance
- d. Total number of actual direct manufacturing labor-hours used
- e. Total number of standard direct manufacturing labor-hours allowed for the units produced
- f. Production-volume variance
- B. Describe how Gallo’s control of variable manufacturing overhead items differs from its control of fixed manufacturing overhead items.
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The Costa Company uses a flexible budget and standard costs to aid planning and control of its machining manufacturing operations. Its costing system for manufacturing has two direct-cost categories (direct materials and direct manufacturing labor-both variable) and
two overhead-cost categories (variable manufacturing overhead and fixed manufacturing overhead, both allocated using direct manufacturing labor-hours). The following actual results are for August:
E (Click the icon to view the results.)
Data Table
Some additional information about Costa Company's budget, standard costs and labor follows:
A (Click the icon to view additional information.)
Read the requirements.
Direct materials price variance (based on purchases)
$179,300 F
Direct materials efficiency variance
$770,500 U
Requirement 1. Compute the listed amounts for August.
Direct manufacturing labor costs incurred
624,750
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Forsythe,
Inc. uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for the year and their allocation bases are as follows:
1(Click
the icon to view the budgeted costs and activity bases.)
Read the
requirements2.
Requirement 1. Compute the predetermined overhead allocation rate for each activity.
Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate for each activity. (Round your answers to the nearest cent.)
Predetermined OH
(1)
÷
(2)
=
allocation rate
Materials handling
÷
=
Machine setup
÷
=
Insertion of parts
÷
=…
The measure of activity in the standard costing system used at Esta GmbH is machining hours. The company's flexible manufacturing overhead budget and then data regarding the most recent period's operations are given below:
Flexible Budget:
Budgeted Level of Activity: 6,600 machining hours
Overhead costs at the Budgeted activity level:
Variable Overhead Cost: $17,226
Fixed Overhead Cost: $13,992
Most Recent period's operations:
Actual level of activity: 7,200 machining hours
Standard level of activity for output: 7,140 machining hours
Actual total variable overhead cost: $17,856
Actual total fixed overhead cost: $14,256
PART A
What is the variable overhead rate variance? (936 favorable, 481 unfavorable, 630 unfavorable, 779 favorable, OR 2,267 favorable)
PART B
What is the variable overhead efficiency variance? (157 unfavorable, 1409 unfavorable, 1566 unfavorable, 1488 unfavorable, OR 149 unfavorable)
PART C
What is the fixed overhead budget variance? (264 unfavorable, 1272…
Chapter 8 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 8 - How do managers plan for variable overhead costs?Ch. 8 - How does the planning of fixed overhead costs...Ch. 8 - How does standard costing differ from actual...Ch. 8 - What are the steps in developing a budgeted...Ch. 8 - What are the factors that affect the spending...Ch. 8 - Assume variable manufacturing overhead is...Ch. 8 - Describe the difference between a direct materials...Ch. 8 - What are the steps in developing a budgeted fixed...Ch. 8 - Why is the flexible-budget variance the same...Ch. 8 - Explain how the analysis of fixed manufacturing...
Ch. 8 - Provide one caveat that will affect whether a...Ch. 8 - The production-volume variance should always be...Ch. 8 - What are the variances in a 4-variance analysis?Ch. 8 - Overhead variances should be viewed as...Ch. 8 - Describe how flexible-budget variance analysis can...Ch. 8 - Each of the following statements is correct...Ch. 8 - Steed Co. budgets production of 150,000 units in...Ch. 8 - As part of her annual review of her companys...Ch. 8 - Culpepper Corporation had the following...Ch. 8 - Fordham Corporation produces a single product. The...Ch. 8 - Variable manufacturing overhead, variance...Ch. 8 - Fixed manufacturing overhead, variance analysis...Ch. 8 - Variable manufacturing overhead variance analysis....Ch. 8 - Fixed manufacturing overhead variance analysis...Ch. 8 - Manufacturing overhead, variance analysis. The...Ch. 8 - 4-variance analysis, fill in the blanks. ProChem...Ch. 8 - Straightforward 4-variance overhead analysis. The...Ch. 8 - Straightforward coverage of manufacturing...Ch. 8 - Overhead variances, service sector. Meals Made...Ch. 8 - Total overhead, 3-variance analysis. Pampered...Ch. 8 - Production-volume variance analysis and...Ch. 8 - Overhead variances, service setting. Carlyle...Ch. 8 - Identifying favorable and unfavorable variances....Ch. 8 - Flexible-budget variances, review of Chapters 7...Ch. 8 - Comprehensive variance analysis. Cooking Whiz...Ch. 8 - Journal entries (continuation of 8-35). A. Prepare...Ch. 8 - Graphs and overhead variances. Best Around, Inc.,...Ch. 8 - Overhead variance, missing information. Consider...Ch. 8 - Flexible budgets, 4-variance analysis. (CMA,...Ch. 8 - Activity-based costing, batch-level variance...Ch. 8 - Overhead variances and sales-volume variance. The...Ch. 8 - Activity-based costing, batch-level variance...Ch. 8 - Comprehensive review of Chapters 7 and 8, working...Ch. 8 - Review of Chapters 7 and 8, 3-variance analysis....Ch. 8 - Nonfinancial variances. Kathys Kettle Potato Chips...Ch. 8 - Overhead variances, service sector. Cavio is a...Ch. 8 - Direct-cost and overhead variances, income...Ch. 8 - Overhead variances, ethics. Carpenter Company uses...
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