Ruby Company produces a chair that requires a standard 3 yards of material per unit. The standard price of one yard of material is $10.80. During the month, 7, 700 chairs were manufactured, using 23,300 yards at a cost of $11.45 per yard. Determine the (a) direct materials price variance, (b) direct materials quantity variance, and (c) total direct materials cost variance. Enter favorable variances as negative numbers. a. Direct materials price variance Sfill in the blank 1 b. Direct materials quantity variance $fill in the blank 3 c. Total direct materials cost variance Sfill in the blank 5

Ruby Company produces a chair that requires a standard 3 yards of material per unit. The standard price of one yard of material is $10.80. During the month, 7, 700 chairs were manufactured, using 23,300 yards at a cost of $11.45 per yard. Determine the (a) direct materials price variance, (b) direct materials quantity variance, and (c) total direct materials cost variance. Enter favorable variances as negative numbers. a. Direct materials price variance Sfill in the blank 1 b. Direct materials quantity variance $fill in the blank 3 c. Total direct materials cost variance Sfill in the blank 5

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Description: Ruby Company produces a chair that requires a standard 3 yards of material per unit. The standard price of one yard of material is $10.80. During the month, 7, 700 chairswere manufactured, using 23,300 yards at a cost of $11.45 per yard. Determine t

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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Kavallia Company set a standard cost for one item at 328,000; allowable deviation is 14,500. Actual costs for the past six months are as follows: Required: 1. Calculate the variance from standard for each month. Which months should be investigated? 2. What if the company uses a two-part rule for investigating variances? The allowable deviation is the lesser of 4 percent of the standard amount or 14,500. Now which months should be investigated?
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.
Recompute the variances from the second Acme Inc. exercise using $0.0725 as the standard cost of the material and $14 as the standard labor cost per hour. How has your explanation of the variances changed?
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.
Use the following standard cost card for 1 gallon of ice cream to answer the questions. Actual direct costs incurred to make 50 gallons of ice cream: 275 quarts of cream at $1.05 per quart 832 ounces of sugar at $0.075 per ounce 165 minutes of labor at $37 per hour All materials used were bought during the current period. A. Compute the material and labor variances. B. comment on the results and possible causes of the variances.
At the beginning of the year, Lopez Company had the following standard cost sheet for one of its chemical products: Lopez computes its overhead rates using practical volume, which is 80,000 units. The actual results for the year are as follows: (a) Units produced: 79,600; (b) Direct labor: 158,900 hours at 18.10; (c) FOH: 831,000; and (d) VOH: 112,400. Required: 1. Compute the variable overhead spending and efficiency variances. 2. Compute the fixed overhead spending and volume variances.
Marten Company has a cost-benefit policy to investigate any variance that is greater than 1,000 or 10% of budget, whichever is larger. Actual results for the previous month indicate the following: The company should investigate: a. neither the materials variance nor the labor variance. b. the materials variance only. c. the labor variance only. d. both the materials variance and the labor variance.
Use the following standard cost card for 1 gallon of ice cream to answer the questions. Actual direct costs incurred to make 50 gallons of ice cream: 275 quarts of cream at $1.05 per quart 832 ounces of sugar at $0.075 per ounce 165 minutes of labor at $37 per hour All material used was bought during the current period. A. Compute the material and labor variances. B. Comment on the results and possible causes of the variances.
Ruby Company produces a chair that requires 6 yards of material per unit. The standard price of one yard of material is $9.90. During the month, 5,600 chairs were manufactured, using 33,900 yards at a cost of $9.40 per yard. Enter favorable variances as negative numbers. (a) Determine the price variance. (b) Determine the quantity variance. (c) Determine the cost variance.
Ruby Company produces a chair for which the standard specifies 3 yards of material per unit. The standard price of one yard of material is $9.90. During the month, 7,500 chairs were manufactured, using 22,300 yards at a cost of $10.49 per yard. Determine the following: Enter favorable variances as negative numbers. a. Direct materials price variance b. Direct materials quantity variance c. Total direct materials cost variance
Ruby Company produces a chair that requires 3 yards of material per unit. The standard price of one yard of material is $13.90. During the month, 7,400 chairs were manufactured, using 21,800 yards at a cost of $13.21 per yard. Enter favorable variances as negative numbers. (a) Determine the price variance. $fill in the blank 1 (b) Determine the quantity variance. $fill in the blank 3 (c) Determine the cost variance. $fill in the blank 5
Ruby Company produces a chair that requires 4 yards of material per unit. The standard price of one yard of material is $10.20. During the month, 4,700 chairs were manufactured, using 19,200 yards at a cost of $10.81 per yard. Enter favorable variances as negative numbers. (a) Determine the price variance. Favorable (b) Determine the quantity variance. Unfavorable (c) Determine the cost variance. Favorable %24 %24