Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 9, Problem 9E
Glacier Bicycle Company manufactures commuter bicycles from recycled materials. The following data for October are available:
- a. Determine for October the direct labor rate variance, direct labor time variance, and total direct labor cost variance.
- b. How much direct labor should be debited to Work in Process?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Question 2a) Refer to the information in Question 1 for data. Now, assume that Juju has decided to use a plantwide overhead rate based on the direct labor hours.Required:i) Calculate the predetermined plantwide overhead rate. (Note: Round to the nearest cent.)ii) Calculate the overhead applied to production for the month of Jun.iii) Calculate the overhead variance for the month of Jun
Computing and journalizing standard cost variances
McKnight manufactures coffee mugs that it sells to other companies for customizing with
their own logos. McKnight prepares flexible budgets and uses a standard cost system to
control manufacturing costs. The standard unit cost of a coffee mug is based on static budget
volume of 59,800 coffee mugs per month:
Direct Materials (0.2 lbs. @ $0.25 per Ib.)
$ 0.05
Direct Labor (3 minutes @ $0.11 per minute)
0.33
Manufacturing Overhead:
Variable (3 minutes @ $0.06 per minute)
$ 0.18
Fixed (3 minutes @ $0.15 per minute)
0.45
0.63
Total Cost Per Coffee Mug
$ 1.01
Actual cost and production information for July 2020 follow:
а.
Actual production and sales were 62,500 coffee mugs.
b. Actual direct materials usage was 10,000 Ibs. at an actual cost of $0.17 per Ib.
Actual direct labor usage of 198,000 minutes at a cost of $25,740.
d. Actual overhead cost was $8,500 variable and $32,100 fixed.
e. Selling and administrative costs were $110,000.
C.
1. Using the four-variance approach, what is the volume variance?
2. Using the four-variance approach, what is the fixed overhead spending?
3. Using the four-variance approach, what is the variable overhead efficiency variance?
4. Using the four-variance approach, what is the variable overhead spending variance?
Chapter 9 Solutions
Managerial Accounting
Ch. 9 - What are the basic objectives in the use of...Ch. 9 - What is meant by reporting by the principle of...Ch. 9 - What are the two variances between the actual cost...Ch. 9 - The materials cost variance report for Nickols...Ch. 9 - A. What are the two variances between the actual...Ch. 9 - Prob. 6DQCh. 9 - Would the use of standards be appropriate in a...Ch. 9 - A. Describe the two variances between the actual...Ch. 9 - At the end of the period, the factory overhead...Ch. 9 - If variances are recorded in the accounts at the...
Ch. 9 - Direct materials variances Bellingham Company...Ch. 9 - Direct labor variances Bellingham Company produces...Ch. 9 - Factory overhead controllable variance Bellingham...Ch. 9 - Factory overhead volume variance Bellingham...Ch. 9 - Standard cost journal entries Bellingham Company...Ch. 9 - Prob. 6BECh. 9 - Crazy Delicious Inc. produces chocolate bars. The...Ch. 9 - Prob. 2ECh. 9 - Salisbury Bottle Company manufactures plastic...Ch. 9 - The following data relate to the direct materials...Ch. 9 - De Soto Inc. produces tablet computers. The...Ch. 9 - Standard direct materials cost per unit from...Ch. 9 - H.J. Heinz Company uses standards to control its...Ch. 9 - Direct labor variances The following data relate...Ch. 9 - Glacier Bicycle Company manufactures commuter...Ch. 9 - Ada Clothes Company produced 40,000 units during...Ch. 9 - Prob. 11ECh. 9 - Direct materials and direct labor variances At the...Ch. 9 - Flexible overhead budget Leno Manufacturing...Ch. 9 - Prob. 14ECh. 9 - Factory overhead cost variances The following data...Ch. 9 - Thomas Textiles Corporation began November with a...Ch. 9 - Prob. 17ECh. 9 - Factory overhead cost variance report Tannin...Ch. 9 - Prob. 19ECh. 9 - Prob. 20ECh. 9 - Income statement indicating standard cost...Ch. 9 - Prob. 22ECh. 9 - Prob. 23ECh. 9 - Rosenberry Company computed the following revenue...Ch. 9 - Lowell Manufacturing Inc. has a normal selling...Ch. 9 - Shasta Fixture Company manufactures faucets in a...Ch. 9 - Flexible budgeting and variance analysis I Love My...Ch. 9 - Direct materials, direct labor, and factory...Ch. 9 - Factory overhead cost variance report Tiger...Ch. 9 - CodeHead Software Inc. does software development....Ch. 9 - Direct materials and direct labor variance...Ch. 9 - Flexible budgeting and variance analysis Im Really...Ch. 9 - Direct materials, direct labor, and factory...Ch. 9 - Factory overhead cost variance report Feeling...Ch. 9 - Prob. 5PBCh. 9 - Prob. 1COMPCh. 9 - Advent Software uses standards to manage the cost...Ch. 9 - Prob. 2MADCh. 9 - Prob. 3MADCh. 9 - Prob. 4MADCh. 9 - Ethics in action Dash Riprock is a cost analyst...Ch. 9 - Variance interpretation Vanadium Audio Inc. is a...Ch. 9 - MinnOil performs oil changes and other minor...Ch. 9 - Marten Company has a cost-benefit policy to...Ch. 9 - Prob. 3CMACh. 9 - JoyT Company manufactures Maxi Dolls for sale in...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Breakaway Companys labor information for May is as follows: A. What is the actual direct labor rate per hour? B. What is the standard direct labor rate per hour? C. What was the total standard direct labor cost for May? D. What was the direct labor rate variance for May?arrow_forwardRath Company showed the following information for the year: Required: 1. Calculate the standard direct labor hours for actual production. 2. Calculate the applied variable overhead. 3. Calculate the total variable overhead variance.arrow_forwardMulliner Company showed the following information for the year: Required: 1. Calculate the standard direct labor hours for actual production. 2. Calculate the applied variable overhead. 3. Calculate the total variable overhead variance.arrow_forward
- What are the equations to find these answers? Calculate the direct materials price variance for March. b.Calculate the direct materials quantity variance for March. c.Calculate the direct labor rate variance for March. d.Calculate the direct labor efficiency variance for March. e.Calculate the variable overhead spending variance for March. f.Calculate the variable overhead efficiency variance for March. g.Calculate the fixed overhead spending variance for March.arrow_forwardWhich of the following is a value-added activity? a.waiting b.inspection c.processing d.moving Which of the following statements is characteristic of overhead? a.The adjusted cost of goods sold is equal to the normal cost of goods manufactured plus or minus the overhead variance. b.Variances in overhead are expected every other month. c.lf the overhead variance shows overapplied overhead, then that amount would be subtracted from normal cost of goods sold. d.lf the overhead variance shows underapplied overhead, then that amount would be subtracted from normal cost of goods sold. Which accounting method is used for external reporting? a.absorption costing b.transfer price costing c.variable costing d.responsibility costingarrow_forwardGauging the Favorableness of Variances When variances occur, they are described as being either favorable or unfavorable. When actual activity consumes more time or money than initially planned, an unfavorable variance exists. However, when actual activity consumes less time or money than initially planned, a favorable variance exists. Note that the terms favorable and unfavorable are used, rather than saying that a variance is good or bad, because until the cause of a variance is discovered, it is not clear whether a variance is either good or bad. Note: Use the minus sign to indicate negative values (when the budgeted amount is greater than the actual). If a company calculates that the actual cost for the actual hours worked by employees was $4,600,000, and the amount budgeted for those hours actually worked was $4,800,000, the actual cost for hours worked less the budgeted cost for hours worked is $ less than ✔ the budgeted cost at actual hours worked. What type of variance is this?…arrow_forward
- i) Using the high-low method derive the cost function that can be used to predict the Sales&Marketing department overhead cost using the Number of Baby Powder OrdersReceived during the month (X1) as the activity level. ii) Using the high-low method derive the cost function that can be used to predict the Sales&Marketing department overhead cost using the Total weight of Baby Powder sold duringthe month in Kgs (X2)as the activity level iii) Using the cost function derived in (i) above using the Number of Baby Powder OrdersReceived during the month (X1) as the activity level estimate the Sales &Marketingdepartment overhead cost for the month of September 2021 where the Number of BabyPowder Orders Received is expected to be 1,800 orders iv) Using the cost function derived in (ii) above using the Total weight of Baby Powder soldduring the month in Kgs (X2) as the activity level estimate the Sales &Marketingdepartmentoverhead cost for the month of September 2021 where Total…arrow_forwardDirickson Incorporated has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor- hours. Inputs Direct materials Direct labor Variable manufacturing overhead The company has reported the following actual results for the product for July: Actual output Raw materials purchased Actual cost of raw materials purchased Raw materials used in production Actual direct labor-hours Actual direct labor cost Actual variable overhead cost The labor efficiency variance for the month is closest to: Multiple Choice $1,080 F $1,176 F Standard Quantity or Hours per Unit of Output 7.6 ounces 0.10 hours 0.10 hours $1,080 U $ 541,800 Standard Price or 7,600 units 63,000 ounces Rate $9.40 per ounce $18.00 per hour $5.30 per hour $ 16,072 $ 4,592 57,750 ounces 820 hoursarrow_forwardThingOne Company has the following information available for the past year. They use machine hours to allocate overhead. What is the variable overhead efficiency variance?arrow_forward
- Gunnison Company had the following equivalent units schedule and cost information for its Sewing Department for the month of December: Required: 1. Calculate the unit cost for December, using the FIFO method. 2. Calculate the cost of goods transferred out, calculate the cost of EWIP, and reconcile the costs assigned with the costs to account for. 3. What if you were asked for the unit cost from the month of November? Calculate Novembers unit cost and explain why this might be of interest to management.arrow_forwardPower Co.s labor information for June is as follows: A. What was the actual labor rate per hour? B. What was the standard labor rate per hour? C. What was the total standard labor cost for units produced in June? D. What was the direct labor time variance for June?arrow_forwardMaking journal entries Assume that during the month of April the production report of Algonquin Adhesives Inc. in E8-10 revealed the following information: Make journal entries to charge materials (use the materials purchase price variance) and labor to Work in Process. (Remember to retrieve the standard costs from E8-10 before solving this exercise.)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningPrinciples of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage LearningManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY