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Required: 1. Compute the materials price and quantity variances for the year. 2. Compute the labor rate and efficiency variances for the year. 3. For manufacturing overhead compute: a. The variable overhead rate and efficiency variances for the year. b. The fixed overhead budget and volume variances for the year. Note: For all requirements, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. 1. Materials price variance 1. Materials quantity variance 2. Labor rate variance 2. Labor efficiency variance 3a. Variable overhead rate variance 3a. Variable overhead efficiency variance 3b. Fixed overhead budget variance 3b. Fixed overhead volume variance

Required: 1. Compute the materials price and quantity variances for the year. 2. Compute the labor rate and efficiency variances for the year. 3. For manufacturing overhead compute: a. The variable overhead rate and efficiency variances for the year. b. The fixed overhead budget and volume variances for the year. Note: For all requirements, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. 1. Materials price variance 1. Materials quantity variance 2. Labor rate variance 2. Labor efficiency variance 3a. Variable overhead rate variance 3a. Variable overhead efficiency variance 3b. Fixed overhead budget variance 3b. Fixed overhead volume variance

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Required: 1. Compute the materials price and quantity variances for the year. 2. Compute the labor rate and efficiency variances for the year. 3. For manufacturing overhead compute: a. The variable overhead rate and efficiency variances for the year. b. The fixed overhead budget and volume variances for the year. Note: For all requirements, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. 1. Materials price variance 1. Materials quantity variance 2. Labor rate variance 2. Labor efficiency variance 3a. Variable overhead rate variance 3a. Variable overhead efficiency variance 3b. Fixed overhead budget variance 3b. Fixed overhead volume variance
Transcribed Image Text:Required: 1. Compute the materials price and quantity variances for the year. 2. Compute the labor rate and efficiency variances for the year. 3. For manufacturing overhead compute: a. The variable overhead rate and efficiency variances for the year. b. The fixed overhead budget and volume variances for the year. Note: For all requirements, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. 1. Materials price variance 1. Materials quantity variance 2. Labor rate variance 2. Labor efficiency variance 3a. Variable overhead rate variance 3a. Variable overhead efficiency variance 3b. Fixed overhead budget variance 3b. Fixed overhead volume variance
"Wonderful! Not only did our salespeople do a good job in meeting the sales budget this year, but our production people did a good job in controlling costs as well," said Kim Clark, president of Martell Company. "Our $29,250 overall manufacturing cost variance is only 1.0% of the $2,925,000 standard cost of products made during the year. That's well within the 3% parameter set by management for acceptable variances. It looks like everyone will be in line for a bonus this year." The company produces and sells a single product. The standard cost card for the product follows: (1) Standard Quantity or Hours 2.50 feet 2.3 hours 2.3 hours 2.3 hours Inputs Direct materials Direct labor Variable overhead Fixed overhead Total standard cost per unit (2) Standard Price or Rate $3.30 per foot $ 10 per hour $ 3.00 per hour $ 5.00 per hour Denominator activity level (direct labor-hours) Budgeted fixed overhead costs Actual variable overhead costs incurred Actual fixed overhead costs incurred The following additional information is available for the year just completed: a. The company manufactured 25,000 units of product during the year. b. A total of 60,000 feet of material was purchased during the year at a cost of $3.70 per foot. All of this material was used to manufacture the 25,000 units produced. There were no beginning or ending inventories for the year. c. The company worked 60,000 direct labor-hours during the year at a direct labor cost of $9.60 per hour. d. Overhead is applied to products on the basis of standard direct labor-hours. Data relating to manufacturing overhead costs follow: Standard Cost (1) x (2) $ 8.25 23.00 6.90 11.50 $49.65 55,000 $ 275,000 $ 186,000 $ 270,000
Transcribed Image Text:"Wonderful! Not only did our salespeople do a good job in meeting the sales budget this year, but our production people did a good job in controlling costs as well," said Kim Clark, president of Martell Company. "Our $29,250 overall manufacturing cost variance is only 1.0% of the $2,925,000 standard cost of products made during the year. That's well within the 3% parameter set by management for acceptable variances. It looks like everyone will be in line for a bonus this year." The company produces and sells a single product. The standard cost card for the product follows: (1) Standard Quantity or Hours 2.50 feet 2.3 hours 2.3 hours 2.3 hours Inputs Direct materials Direct labor Variable overhead Fixed overhead Total standard cost per unit (2) Standard Price or Rate $3.30 per foot $ 10 per hour $ 3.00 per hour $ 5.00 per hour Denominator activity level (direct labor-hours) Budgeted fixed overhead costs Actual variable overhead costs incurred Actual fixed overhead costs incurred The following additional information is available for the year just completed: a. The company manufactured 25,000 units of product during the year. b. A total of 60,000 feet of material was purchased during the year at a cost of $3.70 per foot. All of this material was used to manufacture the 25,000 units produced. There were no beginning or ending inventories for the year. c. The company worked 60,000 direct labor-hours during the year at a direct labor cost of $9.60 per hour. d. Overhead is applied to products on the basis of standard direct labor-hours. Data relating to manufacturing overhead costs follow: Standard Cost (1) x (2) $ 8.25 23.00 6.90 11.50 $49.65 55,000 $ 275,000 $ 186,000 $ 270,000
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