Longman, Ic., manufactures lead crystal glasses. Longman, Inc.'s managers recently calculated the following: Variances after completing production of 6,800 glasses: Direct materials cost variance $1,496 F Direct labor cost variance $6,120 F Direct materials efficiency variance $680 U Direct labor efficiency variance $8,840 U Read the requirements. Requirement 1. For each variance, who in Longman, Inc.'s organization is most likely responsible? Direct materials cost variance Direct materials efficiency variance - X Requirements Direct labor cost variance Direct labor efficiency variance 1. For each variance, who in Longman, Inc.'s organization is most likely responsible? 2. Interpret the direct materials and direct labor variances for Longman, Inc.'s management. Print Done

Longman, Ic., manufactures lead crystal glasses. Longman, Inc.'s managers recently calculated the following: Variances after completing production of 6,800 glasses: Direct materials cost variance $1,496 F Direct labor cost variance $6,120 F Direct materials efficiency variance $680 U Direct labor efficiency variance $8,840 U Read the requirements. Requirement 1. For each variance, who in Longman, Inc.'s organization is most likely responsible? Direct materials cost variance Direct materials efficiency variance - X Requirements Direct labor cost variance Direct labor efficiency variance 1. For each variance, who in Longman, Inc.'s organization is most likely responsible? 2. Interpret the direct materials and direct labor variances for Longman, Inc.'s management. Print Done

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Description: Longman, Inc., manufactures lead crystal glasses. Longman, Inc.'s managers recently calculated the following:Variances after completing production of 6,800 glasses:Direct materials cost variance$1,496 F Direct labor cost variance$6,120 FDirect mater

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter8: Standard Costs And Variances

Section: Chapter Questions

Problem 5PA: Ed Co. manufactures two types of O rings, large and small. Both rings use the same material but...

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The management of Golding Company has determined that the cost to investigate a variance produced by its standard cost system ranges from 2,000 to 3,000. If a problem is discovered, the average benefit from taking corrective action usually outweighs the cost of investigation. Past experience from the investigation of variances has revealed that corrective action is rarely needed for deviations within 8% of the standard cost. Golding produces a single product, which has the following standards for materials and labor: Actual production for the past 3 months follows, with the associated actual usage and costs for materials and labor. There were no beginning or ending raw materials inventories. Required: 1. What upper and lower control limits would you use for materials variances? For labor variances? 2. Compute the materials and labor variances for April, May, and June. Identify those that would require investigation by comparing each variance to the amount of the limit computed in Requirement 1. Compute the actual percentage deviation from standard. Round all unit costs to four decimal places. Round variances to the nearest dollar. Round variance rates to three decimal places so that percentages will show to one decimal place. 3. CONCEPTUAL CONNECTION Let the horizontal axis be time and the vertical axis be variances measured as a percentage deviation from standard. Draw horizontal lines that identify upper and lower control limits. Plot the labor and material variances for April, May, and June. Prepare a separate graph for each type of variance. Explain how you would use these graphs (called control charts) to assist your analysis of variances.
The president of McGrade Industries wants an analysis prepared to help explain why the variances computed in requirement 1 occurred. Using the worksheet called PRIMEVAR that follows these requirements, calculate the material and labor variances for McGrade Industries. The problem requires you to enter the input in the Data Section as well as formulas in the Answer Section.
In all of the exercises involving variances, use F and U to designate favorable and unfavorable variances, respectively. E8-1 through E8-5 use the following data: The standard operating capacity of Tecate Manufacturing Co. is 1,000 units. A detailed study of the manufacturing data relating to the standard production cost of one product revealed the following: 1. Two pounds of materials are needed to produce one unit. 2. Standard unit cost of materials is 8 per pound. 3. It takes one hour of labor to produce one unit. 4. Standard labor rate is 10 per hour. 5. Standard overhead (all variable) for this volume is 4,000. Each case in E8-1 through E8-5 requires the following: a. Set up a standard cost summary showing the standard unit cost. b. Analyze the variances for materials and labor. c. Make journal entries to record the transfer to Work in Process of: 1. Materials costs 2. Labor costs 3. Overhead costs (When making these entries, include the variances.) d. Prepare the journal entry to record the transfer of costs to the finished goods account. Standard unit cost; variance analysis; journal entries 1,000 units were started and finished. Case 1: All prices and quantities for the cost elements are standard, except for materials cost, which is 8.50 per pound. Case 2: All prices and quantities for the cost elements are standard, except that 1,900 lb of materials were used.
Ed Co. manufactures two types of O rings, large and small. Both rings use the same material but require different amounts. Standard materials for both are shown. At the beginning of the month, Edve Co. bought 25,000 feet of rubber for $6.875. The company made 3,000 large O rings and 4,000 small O rings. The company used 14,500 feet of rubber. A. What are the direct materials price variance, the direct materials quantity variance, and the total direct materials cost variance? B. If they bought 10,000 connectors costing $310, what would the direct materials price variance be for the connectors? C. If there was an unfavorable direct materials price variance of $125, how much did they pay per toot for the rubber?
Sommers Company uses the following rule to determine whether materials usage variances should be investigated: A materials usage variance will be investigated anytime the amount exceeds the lesser of 12,000 or 10% of the standard cost. Reports for the past 5 weeks provided the following information: Required: 1. Using the rule provided, identify the cases that will be investigated. 2. CONCEPTUAL CONNECTION Suppose investigation reveals that the cause of an unfavorable materials usage variance is the use of lower-quality materials than are normally used. Who is responsible? What corrective action would likely be taken? 3. CONCEPTUAL CONNECTION Suppose investigation reveals that the cause of a significant unfavorable materials usage variance is attributable to a new approach to manufacturing that takes less labor time but causes more material waste. Examination of the labor efficiency variance reveals that it is favorable and larger than the unfavorable materials usage variance. Who is responsible? What action should be taken?
Madison Company uses the following rule to determine whether direct labor efficiency variances ought to be investigated. A direct labor efficiency variance will be investigated anytime the amount exceeds the lesser of 12,000 or 10 percent of the standard labor cost. Reports for the past five weeks provided the following information: Required: 1. Using the rule provided, identify the cases that will be investigated. 2. Suppose that investigation reveals that the cause of an unfavorable direct labor efficiency variance is the use of lower quality direct materials than are usually used. Who is responsible? What corrective action would likely be taken? 3. Suppose that investigation reveals that the cause of a significant favorable direct labor efficiency variance is attributable to a new approach to manufacturing that takes less labor time but causes more direct materials waste. Upon examining the direct materials usage variance, it is discovered to be unfavorable, and it is larger than the favorable direct labor efficiency variance. Who is responsible? What action should be taken? How would your answer change if the unfavorable variance were smaller than the favorable?
Refer to the information for Cinturon Corporation on the previous page. Required: 1. Break down the total variance for materials into a price variance and a usage variance using the columnar and formula approaches. 2. CONCEPTUAL CONNECTION Suppose the Boise plant manager investigates the materials variances and is told by the purchasing manager that a cheaper source of leather strips had been discovered and that this is the reason for the favorable materials price variance. Quite pleased, the purchasing manager suggests that the materials price standard be updated to reflect this new, less expensive source of leather strips. Should the plant manager update the materials price standard as suggested? Why or why not?
The worksheet you have developed will handle most simple variance analysis problems. Try the problem below for Pscheidl, Inc.: Actual production for October was 11,500 units. Compute the direct materials and direct labor variances for Pscheidl, Inc. Be careful when entering your input because this problem presents the information in a different format from the McGrade Industries data. Save the file as PRIMEVAR4. Print the worksheet when done.
Basix Inc. calculates direct manufacturing labor variances and has the following information: 1. Actual hours worked: 200 2. Standard hours allowed for actual output: 250 3. Actual rate per hour: $12 4. Standard rate per hour: $10 Given the information above, which of the following is correct regarding direct manufacturing labor variances? A. The price and efficiency variances are unfavorable. B. The price variance is favorable, while the efficiency variance is unfavorable. C. The price and efficiency variances are favorable. D. The price variance is unfavorable, while the efficiency variance is favorable.
Please redo this problem and show me steps on how to get the following questions correct, its stating I am wrong. Please help Direct Labor Variances The following data relate to labor cost for production of 6,600 cellular telephones: Actual: 4,480 hrs. at $16.10 $72,128 Standard: 4,410 hrs. at $16.40 $72,324 a. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter all values as a positive number and then identify the variance (e.g. Favorable or Unfavorable) in the adjacent column. Rate variance $ Favorable Time variance $ Unfavorable Total direct labor cost variance $ Favorable b. The employees may have been less-experienced or poorly trained, thereby resulting in a lower labor rate than planned. The lower level of experience or training may have resulted in less efficient performance. Thus, the actual time required was more than standard. LIz C
The management of Cleancut Lawnmowers has calculated the following variances: Direct materials cost variance Direct materials efficiency variance Direct labor cost variance Direct labor efficiency variance Variable overhead cost variance Variable overhead efficiency variance Fixed overhead cost variance $10,000 U 37,000 F 15,000 F 14,000 U 3,000 F 6,500 F 3,000 F When determining the total product cost flexible budget variance, what is the total manufacturing overhead variance of the company? OA. $3,000 F OB. $12,500 F OC. $6,500 F OD. $9,500 F
Resset Co. provides the following results of April’s operations: F indicates favorable and U indicates unfavorable. In applying management by exception, the company investigates all variances of $400 or more. Which variances will the company investigate? Direct materials price variance . $ 300 F Direct labor efficiency variance . $2,200 F Direct materials quantity variance . 3,000 U Controllable overhead variance . 400 U Direct labor rate variance . 100 U Fixed overhead volume variance . 500 F