Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 10, Problem 38P
The following data pertain to Colgate-Palmolive’s liquid filling line during the first 10 months of a particular year. The standard ratio of direct-labor hours to machine hours is 4:1. The standard direct-labor rate is $15.08.
*Source of data: Alan S. Levitan and Sidney J. Baxendale, “Analyzing the Labor Efficiency Variance to Signal Process Engineering Problems,” Journal of Cost Management 6, no. 2, p. 70.
Required:
- 1. Show how the following amounts were calculated for the month of January:
- a. Standard direct-labor hours.
- b. Direct-labor efficiency variance.
- 2. Calculate the following amounts.
- a. The standard direct-labor cost for each of the 10 months.
- b. For each month, 20 percent of the standard direct-labor cost.
- 3. Suppose management investigates all variances in excess of 20 percent of
standard cost. Which variances will be investigated? - 4. Suppose the standard deviation for the direct-labor efficiency variance is $5,000. Draw a statistical control chart, and plot the variance data.
- 5. Using the chart developed in requirement (4), which variances will be investigated?
- 6. The variances for March, April, and June are much larger than the others. Suggest at least one reason for this.
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Students have asked these similar questions
Ramona Company has the following labor-related data:
Standard labor hours for output: 15,000 hours
Standard labor rate: $10 per hour
Actual labor rate: $8 per hour
Actual labor hours: 17,500 hours
Given this data, which one of the following would be included in the single journal entry needed to record Wages Payable and the labor variances?
a. credit Labor Efficiency Variance for $25,000
b. debit Labor Rate Variance for $35,000
c. credit Wages Payable for $175,000
d. debit Work-In-Process Inventory for $140,000
e. credit Labor Rate Variance for $10,000
f. credit Labor Rate Variance for $35,000
g. credit Labor Efficiency Variance for $10,000
Upon your review of Shalom Company's standard cost card. You found the following information:
Standards:
Material
Labor
Actual:
Production
Material
Labor
5.0 feet per unit @ P4.00 per foot
3.0 hours per unit @ 35.00 per hour
2,800 units produced during the month
14,500 feet used; 15,100 feet purchased @ P3.70 per foot
8,150 direct labor hours @ P36.00 per hour
Determine the variances based on the information above. Indicate as favorable or unfavorable.
Format should be: 8,000 F or 8,000 UF
No need to indicate if the amount is positive or negative.
Amounts must be in whole numbers. Example: 88,000 or (88,000)
Unit costs be in whole numbers. Example: 88
Format of percentages: 88%
Words must be in capital letters.
What is the labor efficiency variance?
Upon your review of Shalom Company's standard cost card. You found the following information:
Standards:
Material
Labor
Actual:
Production
Material
Labor
5.0 feet per unit @ P4.00 per foot
3.0 hours per unit @ 35.00 per hour
2,800 units produced during the month
14,500 feet used; 15,100 feet purchased @ P3.70 per foot
8,150 direct labor hours @ P36.00 per hour
Determine the variances based on the information above. Indicate as favorable or unfavorable.
Format should be: 8,000 F or 8,000 UF
No need to indicate if the amount is positive or negative.
Amounts must be in whole numbers. Example: 88,000 or (88,000)
Unit costs be in whole numbers. Example: 88
Format of percentages: 88%
Words must be in capital letters.
What is the material quantity variance?
Chapter 10 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 10 - Prob. 1RQCh. 10 - What is meant by the phrase management by...Ch. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - What is the interpretation of the direct-material...Ch. 10 - What manager is usually in the best position to...Ch. 10 - What is the interpretation of the direct-material...Ch. 10 - Prob. 10RQ
Ch. 10 - Prob. 11RQCh. 10 - What is the interpretation of the direct-labor...Ch. 10 - What manager is generally in the best position to...Ch. 10 - What is the interpretation of the direct-labor...Ch. 10 - What manager is generally in the best position to...Ch. 10 - Prob. 16RQCh. 10 - Describe five factors that managers often consider...Ch. 10 - Discuss several ways in which standard-costing...Ch. 10 - Describe how standard costs are used for product...Ch. 10 - Prob. 20RQCh. 10 - Prob. 21RQCh. 10 - Saskatewan Can Company manufactures recyclable...Ch. 10 - Refer to the data in the preceding exercise. Use...Ch. 10 - Cayuga Hardwoods produces handcrafted jewelry...Ch. 10 - During June, Danby Companys material purchases...Ch. 10 - Refer to the data in the preceding exercise. Draw...Ch. 10 - The director of cost management for Odessa Company...Ch. 10 - Due to evaporation during production, Plano...Ch. 10 - Prob. 30ECh. 10 - Refer to the data in Exercise 1022, regarding...Ch. 10 - Saskatewan Can Company manufactures recyclable...Ch. 10 - New Jersey Valve Company manufactured 7,800 units...Ch. 10 - Prob. 34PCh. 10 - During May, Joliet Fabrics Corporation...Ch. 10 - Sal Amato operates a residential landscaping...Ch. 10 - Santa Rosa Industries uses a standard-costing...Ch. 10 - The following data pertain to Colgate-Palmolives...Ch. 10 - Orion Corporation has established the following...Ch. 10 - Associated Media Graphics (AMG) is a rapidly...Ch. 10 - The director of cost management for Portland...Ch. 10 - Ogwood Companys Johnstown Division is a small...Ch. 10 - Quincy Farms produces items made from local farm...Ch. 10 - Schiffer Corporation manufactures agricultural...Ch. 10 - Aqua float Corporation manufactures rafts for use...Ch. 10 - Rocky Mountain Camping Equipment, Inc. has...Ch. 10 - Springsteen Company manufactures guitars. The...Ch. 10 - Springsteen Company manufactures guitars. The...Ch. 10 - European Styles, Inc. manufactures womens blouses...Ch. 10 - MacGyver Corporation manufactures a product called...
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