Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
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Chapter 10, Problem 6E
EXERCISE 10-6 Direct Materials and Direct Labor Variances LO10-1, LO10-2
Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:
| Standard Quantity or Hours |
Standard Price or Rate |
Cost |
|
| Direct materials | 4.6 pounds |
$2.50 per pound | $11.50 |
| Direct labor | 0.2 hours |
$18.00 per hour | $3.60 |
During the most recent month, the following activity was recorded:
- Twenty thousand pounds of material were purchased at a cost of $235 per pound.
- All of the material purchased was used to produce 4,000 units of Zoom.
- 750 hours of direct labor time were recorded at a total labor cost of S 14,925.
Required:
- Compute the materials price and quantity variances for the month.
- Compute the labor rate and efficiency variances for the month.
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Direct labor variances
Bellingham Company produces a product that requires 3
standard direct labor hours per unit at a standard hourly rate of
$20.00 per hour. 15,000 units used 63,300 hours at an hourly
rate of $19.55 per hour.
Open spreadsheet
+
This information has been collected in the Microsoft Excel
Online file. Open the spreadsheet, perform the required
analysis, and input your answers in the questions below.
42
a. Direct labor rate variance
b. Direct labor time variance
c. Direct labor cost variance
What is the direct labor (a) rate variance, (b) time variance, and
(c) cost variance? Round your answers to the nearest dollar.
Enter a favorable variance as a negative number using a minus
sign and an unfavorable variance as a positive number.
$
Problem 8 Material and Labor Variance Journal Entries
Clyette Corporation uses a standard cost system and has the following
standard costs for direct materials and direct labor.
Direct materials:
Direct labor
2.5 meters @ P14 per meter
1.6 hours @ P8 per hour
P35.00
P12.80
During the month of February, 15,000 units were produced. The costs related
to the production of the product were as follows:
• 50,000 meters of materials were purchased at a cost of P13.80 per
meter.
40,000 meters of materials were used.
25,000 direct labor hours were used at a cost of P8.60 per hour.
Required: Prepare the journal entries to record the purchased of materials,
used of materials and labor incurrence.
0:29:44
The following materials standards have been established for a particular product:
Standard quantity per unit of output
Standard price
5.2 meters
$18.00 per meter
The following data pertain to operations concerning the product for the last month:
Actual materials purchased
Actual cost of materials purchased.
Actual materials used in production
Actual output
What is the materials price variance for the month?
8,100 meters
$151,065
7,700 meters
1,450 units
Chapter 10 Solutions
Managerial Accounting
Ch. 10.A - EXERCISE 10A-1 Fixed Overhead Variances LO10-4...Ch. 10.A - EXERCISE 10A-2 Predetermined Overhead Rate;...Ch. 10.A - Prob. 3ECh. 10.A - EXERCISE 10A-4 Fixed Overhead Variances LO10-4...Ch. 10.A - EXERCISE 10A5 Using Fixed Overhead Variances LO104...Ch. 10.A - EXERCISE 10A-6 Predetermined Overhead Rate LO10-4...Ch. 10.A - EXERCISE 10A-7 Relations Among Fixed Overhead...Ch. 10.A - Prob. 8PCh. 10.A - PROBLEM 10A-9 Applying Overhead; Overhead...Ch. 10.A - PROBLEM 10A-10 Comprehensive Standard Cost...
Ch. 10.A -
PROBLEM 10A-11 Comprehensive Standard Cost...Ch. 10.A - Prob. 12PCh. 10.B - EXERCISE 10B-1 Standard Cost Flows; Income...Ch. 10.B - Prob. 2ECh. 10.B - Prob. 3ECh. 10.B - Prob. 4ECh. 10.B - Prob. 5PCh. 10.B - Prob. 6PCh. 10 - Prob. 1QCh. 10 - Why are separate price and quantity variances...Ch. 10 - 10-3 Who is generally responsible for the...Ch. 10 - The materials price variance can be computed at...Ch. 10 - 10-5 If the materials price variance is favorable...Ch. 10 - Prob. 6QCh. 10 - Prob. 7QCh. 10 - 10-8 What effect, if any, would you expect...Ch. 10 - 10-9 If variable manufacturing overhead is applied...Ch. 10 - 10-10 Why can undue emphasis on labor efficiency...Ch. 10 -
The Excel worksheet form that appears below is to...Ch. 10 - Prob. 2AECh. 10 - Prob. 1F15Ch. 10 - Prob. 2F15Ch. 10 - Prob. 3F15Ch. 10 - Prob. 4F15Ch. 10 - Prob. 5F15Ch. 10 - Prob. 6F15Ch. 10 - Prob. 7F15Ch. 10 - Prob. 8F15Ch. 10 - Prob. 9F15Ch. 10 - Preble Company manufactures one product. Its...Ch. 10 - Prob. 11F15Ch. 10 - Prob. 12F15Ch. 10 - Prob. 13F15Ch. 10 - Prob. 14F15Ch. 10 - Prob. 15F15Ch. 10 - EXERCISE 10-1 Direct Materials Variances LO10-1...Ch. 10 -
EXERCISE 10-2 Direct Labor Variances...Ch. 10 -
EXERCISE 10–3 Variable Overhead Variances...Ch. 10 - EXERCISE 10-4 Direct Labor and Variable...Ch. 10 -
EXERCISE 10-5 Working Backwards from Labor...Ch. 10 - EXERCISE 10-6 Direct Materials and Direct Labor...Ch. 10 - EXERCISE 10-7 Direct Materials Variances LOIO-1...Ch. 10 -
EXERCISE 10-8 Direct Materials and Direct Labor...Ch. 10 -
PROBLEM 10-9 Comprehensive Variance Analysis...Ch. 10 -
PROBLEM 10-10 Multiple Products, Materials, and...Ch. 10 - PROBLEM 10-11 Direct Materials and Direct Labor...Ch. 10 - PROBLEM 10-12 Variance Analysis in a...Ch. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - PROBLEM 10-15 Comprehensive Variance Analysis...Ch. 10 - Prob. 16PCh. 10 - Prob. 17C
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- Variance Problem Standard Quantity Standard Cost Standard price $1.75 per hr $11.50 per hr $5.00 per hr per unit $7.00 $13.80 $6.00 per unit Direct Materials Direct Labor Variable Overhead 4 1.2 1.2 Manufacturing overhead is applied using direct labor hours as the base. During the month of July, XYZ company had the following information available about production: a. 9,000 units were produced b. 37,000 lbs of raw materials were purchased at a cost of $62,900 c. There was no beginning inventory and no ending iInventory of raw materials d. 10,500 hours of direct labor were used during the month at a cost of $119,175 e. Variable overhead cost in July totaled $57,750 Compute the following and verify the total variance for each component of product cost: 1. Material price variance, Material quantity variance, and Total material variance 2. Labor rate variance, Labor efficiency variance, and Total labor variance 3. Variable Overhead spending variance, Variable Overhead efficiency variance,…arrow_forwardExercise 9.14 Direct Materials and Direct Labor Variances OBJECTIVE 3 Zoller Company produces a dark chocolate candy bar. Recently, the company adopted the fol- lowing standards for one bar of the candy: Direct materials (6.3 oz. @ $0.20) Direct labor (0.08 hr. @ $18.00) Standard prime cost $1.26 1.44 $2.70 During the first week of operation, the company experienced the following actual results: Bars produced: 143,000. b. Ounces of direct materials purchased: 901,200 ounces at $0.21 per ounce. c. There are no beginning or ending inventories of direct materials. d. Direct labor: 11,300 hours at $17.30. а. Required: 1. Compute price and usage variances for direct materials. 2. Compute the rate variance and the efficiency variance for direct labor. 3. Prepare the journal entries associated with direct materials and direct labor.arrow_forwardExercise 3 (Labor and Variable Overhead Variances) Halliwell Audio, Inc., manufactures military-specification compact discs. The company uses standards to control its costs. The labor standards that have been set for one disc are as follows: Standard Hours Standard Cost P2.40 Standard Rate per Hour 24 minutes P6.00 During July, 8,500 hours of direct labor time were recorded to make 20,000 discs. The direct labor cost totaled P49,300 for the month. Required: 1. What direct labor cost should have been incurred to make the 20,000 discs? By how much does this differ from the cost that was incurred? 2. Break down the difference in cost from (1) above into a labor rate variance and a labor efficiency variance. 3. The budgeted variable manufacturing overhead rate is P4 per direct labor-hour. During July, the company incurred P39,100 in variable manufacturing overhead cost. Compute the variable overhead spending and efficiency variances for the month.arrow_forward
- Problem 5: Labor Variance STA Company uses a standard cost system. The following information pertains to direct labor costs for the month of June: Standard direct labor rate per hour Actual direct labor rate per hour Labor rate variance (favorable) Actual output (units) Standard hours allowed for actual production P 10.00 P 9.00 P12,000 2,000 10,000 hours Required: How many actual labor hours were worked during March for STA Company?arrow_forwardBulluck Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate $ 1.00 per gram $ 11.00 per hour $ 2.00 per hour Direct materials 3.5 grams Direct labor 0.7 hours Variable overhead 0.7 hours The company reported the following results concerning this product in July. Actual output 3,000 units Raw materials used in production 11,370 grams Actual direct labor-hours 1,910 hours Purchases of raw materials 12,100 grams Actual price of raw materials purchased $ 1.20 per gram $ 11.40 per hour $ 2.10 per hour Actual direct labor rate Actual variable overhead rate The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The labor rate variance for July is:arrow_forwardQUESTION 4 G. Company has a material standard of 1.1 pound per unit of output. Each pound has a standard price of $25 per pound. During July, G Company paid $118,800 for 5,100 pounds, which they used to produce 4,900 units. What is the direct materials efficiency variance? O $7,250 favorable O $5,000 favorable O $7,250 unfavorable O $5,000 unfavorablearrow_forward
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