Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 10.A, Problem 10P
PROBLEM 10A-10 Comprehensive
“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 wel" said Kim Clark, president of Martell Company. "Our S18,300 overall
The company produces and sells a single product. The standard cost card for the product follows:
| Inputs | (1) Standard Quantity or Hours | (2) Standard Price or Rate | Standard Cost (1) x(2) |
| Direct materials | 2 feet |
$8.45 per foot | $16.90 |
| Direct labor | 1.4 hours |
$16 per hour | 22.40 |
| Variable |
1.4 hours |
$2.50 per hour | 3.50 |
| Fixed overhead | 1.4 hours |
$6 per hour | 8.40 |
| Total standard cost per unit | $51.20 |
The following additional information is available for the year just completed
a The company manufactured 30,000 units of product during the year.
- A total of 64,000 feet of material was purchased during the year at a cost of $8.55 per foot. All of this material was used to manufacture the 30,000 units produced There were no beginning or ending inventories for the year.
- The company worked 43,500 direct labor-hours during the year at a direct labor cost of $15.80 per hour.
- Overhead is applied to products on the basis of standard direct labor-hours. Data relating to manufacturing overhead costs follow:
Required:
- Compute the materials price and quantity' variances for the year.
- Compute the labor rate and efficiency variances for the year.
- 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.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
10. Additional Exercises on GP Variance Analysis
10A) Pharsa Company had the following results in May:
Sales
Cost of goods sold (P 5 per unit)
Gross profit
Actual sales were 500 units higher than the budgeted sales.
Determine the FALSE statement.
a. The sales price variance is P 1,500 unfavorable.
b.
The sales volume variance is P 4,000 favorable.
c. The cost price variance is zero (0).
d. The cost volume variance is P 2,500 favorable.
Net Sales
Cost of Sales
Gross Profit
Budget
P 160,000
100,000
P 60,000
Items 10B to 10F are based on the following information
The management of Marvel Company asked you to submit an analysis of the increase in the
in 2021 based on the past two-year comparative income statements, which are shown below
2021
P 1,237,500
950,000
P 287,500
The selling price increased by 12.5% beginning January 1, 2021.
10B) What is the increase in gross profit due to increase in volume? (VOLUME FACTOR)
a. P 20,000
C. P 50,000
b. P 35,000
d.
10E) What is the percentage change…
Problem 10-9 (Algo) Comprehensive Variance Analysis [LO10-1, LO10-2, LO10-3]
Marvel Parts, Incorporated, manufactures auto accessories. One of the company’s products is a set of seat covers that can be adjusted to fit nearly any small car. The company has a standard cost system in use for all of its products. According to the standards that have been set for the seat covers, the factory should work 1,075 hours each month to produce 2,150 sets of covers. The standard costs associated with this level of production are:
Total
Per Set of Covers
Direct materials
$ 54,825
$ 25.50
Direct labor
$ 10,750
5.00
Variable manufacturing overhead (based on direct labor-hours)
$ 5,375
2.50
$ 33.00
During August, the factory worked only 800 direct labor-hours and produced 2,500 sets of covers. The following actual costs were recorded during the month:
Total
Per Set of Covers
Direct materials (12,500 yards)
$ 58,750
$ 23.50
Direct labor
$ 13,000
5.20
Variable…
having trouble fing the variances this is what question is and this is my answer
ACC 202 Milestone Three: Actual Costs and Revenue Data Appendix
At the end of the first month of opening your business, you calculate the actual operating costs of the business and the income you earned. You also notice and document the difference in what you budgeted for certain materials and labor against the actual amounts you spent on the same.
For your statement of cost of goods sold, use the following data regarding the actual costs incurred by the business over the past month:
Materials purchased: $20,000
Consumed 80% of the purchased materials
Direct labor: $8,493
Overhead costs: $3,765
Note: Assume that the beginning materials and ending work in process are zero for the month.
Use the following revenue and cost information for the income statement. Note that the revenue you use will depend on the pricing level options you chose in Milestone Two. Also, assume that after accounting for…
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
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Problem 10-9 (Algo) Comprehensive Variance Analysis [LO10-1, LO10-2, LO10-3] Marvel Parts, Incorporated, manufactures auto accessories. One of the company's products is a set of seat covers that can be adjusted to fit nearly any small car. The company has a standard cost system in use for all of its products. According to the standards that have been set for the seat covers, the factory should work 1,030 hours each month to produce 2,060 sets of covers. The standard costs associated with this level of production are: Direct materials Direct labor Variable manufacturing overhead (based on direct labor-hours) Direct materials (5,500 yards) Direct labor Variable manufacturing overhead Total $ 39,140 $ 9,270 $ 3,502 During August, the factory worked only 640 direct labor-hours and produced 1,600 sets of covers. The following actual costs were recorded during the month: Per Set of Covers $19.00 4.50 Total $ 29,920 $ 7,520 $4,000 1. Materials price variance 1. Materials quantity variance 2.…arrow_forwardQuestion #2 Sunshine Goods Ltd is a revenue maximizing firm that engages in the analysis of variances to provide useful information to management. The company manufactures and sells three (3) products, RG, KC and MG. During July 2019 the following budgeted and actual results were presented to you the management accountant for analysis: Budgeted Results Product Total Sales $ Volume/units Price $ Contribution margin per unit $ Total contribution margin $ RG 585,000 900 650 820 738,000 KC 500,000 500 1,000 850 425,000 MG 300,000 600 500 720 432,000 Total 2,000 1,595,000 Actual Results Product Total Sales $ Volume/units Price $ Contribution margin per unit $ Total contribution margin $ RG 500,000 500 1,000 800 400,000 KC 270,000 300 900 `900 270,000 MG 105,000 350 300 700 245,000 Total 1,150 915,000 Required Total sales…arrow_forwardProblem 10-9 (Algo) Comprehensive Variance Analysis [LO10-1, LO10-2, LO10-3] Marvel Parts, Incorporated, manufactures auto accessories including a set of seat covers that can be adjusted to fit most cars. According to its standards, the factory should work 1,045 hours each month to produce 2,090 sets of seat covers. The standard costs associated with this level of production are: Per Set of Total Direct materials $ 49,533 Direct labor $ 10,450 Covers $ 23.70 5.00 Variable manufacturing overhead (based on direct labor-hours) $ 4,598 2.20 $ 30.90 During August, the factory worked 800 direct labor-hours and produced 1,900 sets of covers. The following actual costs were recorded during the month: Per Set of Total Direct materials (6,500 yards) Direct labor $ 44,460 Variable manufacturing overhead $ 9,880 $ 4,560 Covers $ 23.40 5.20 2.40 $ 31.00 At standard, each set of covers should require 3.0 yards of material. All of the materials purchased during the month were used in production.…arrow_forward
- Problem 9-24 (Algo) Comprehensive Variance Analysis [LO9-4, LO9-5, LO9-6] Marvel Parts, Incorporated, manufactures auto accessories. One of the company's products is a set of seat covers that can be adjusted to fit nearly any small car. The company uses a standard cost system for all of its products. According to the standards that have been set for the seat covers, the factory should work 1,040 hours each month to produce 2,080 sets of covers. The standard costs associated with this level of production are: Direct materials Direct labor Variable manufacturing overhead (based on direct labor-hours) Direct materials (5,000 yards) Direct labor Variable manufacturing overhead During August, the factory worked only 600 direct labor-hours and produced 1,800 sets of covers. The following actual costs were recorded during the month: Total $ 40,560 $ 7,280 $ 4,160 E R Total $ 34,200 $ 6,660 $ 4,140 < Prev Per Set of Covers $19.50 3.50 At standard, each set of covers should require 2.5 yards of…arrow_forwardPART B REQUIREMENTS: For the given data below calculate all the variances for Level 1,2, and 3 analysis. Explain the performance of the company. 2015 ACTUAL SALES 2015 INVENTORIES IN UNIS Product Units Ending Inventory Begining Inventory 20,000 Price 58,000 Thingone Thingtwo $167 27,000 46,000 $218 8,000 3,000 Actual 2015 INVENTORIES IN UNITS Direct Unit Unit Begining Ending Materials Price Inventory Inventory Changes A kg 4% 32,000 30,000 increase kg 3% 29,000 25,000 decrease unit No 6,000 5,000 change All other costs increase 8% comparing to the previous year's prices. But the workers are not happy with this new pricing policy and they slowed the work 4%.arrow_forwardVariances Spending Efficiency Production-Volume Variable Manufacturing Overhead $7,500 F $30,000 U 0 Fixed Manufacturing Overhead $28,000 U 0 $80,000 U 1. In a combined 3-variance analysis, what would the variance report show? (HINT: The answer is total spending variance $20,500 unfavorable, but I need work to support this)arrow_forward
- Revenue variances Rockport Industries Inc. gathered the following data for March: Planned Actual Sales price per unit $150 $144 Number of units of sales × 12,500 × 12,900 Total sales $1,875,000 $1,857,600 Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. a. Compute the revenue price variance. $fill in the blank 1 b. Compute the revenue volume variance. $fill in the blank 3 c. Compute the total revenue variance. $fill in the blank 5arrow_forwardProblem 9-26 (Algo) Comprehensive Variance Analysis [LO9-4, LO9-5, LO9-6] Highland Company produces a lightweight backpack that is popular with college students. Standard variable costs relating to a single backpack are given below: Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials ? $ 8.00 per yard $ ? Direct labor ? ? ? Variable manufacturing overhead ? $ 2 per direct labor-hour ? Total standard cost per unit $ ? Overhead is applied to production on the basis of direct labor-hours. During March, 600 backpacks were manufactured and sold. Selected information relating to the month’s production is given below: Materials Used Direct Labor Variable Manufacturing Overhead Total standard cost allowed* $ 15,360 $ 9,000 $ 1,800 Actual costs incurred $ 13,965 ? $ 2,985 Materials price variance ? Materials quantity variance $ 600 U Labor rate variance ? Labor efficiency variance ? Variable overhead rate variance ? Variable overhead efficiency variance ? *For the…arrow_forwardQuestion 2.1 TeleTube Inc. manufacturers TVs. Unfortunately, some of the company's data was misplaced by an IT error. Use the following information to replace the lost data: Analysis Actual Results Flexible Variances Flexible Budget Sales- Volume Variances Static Budget Units Sold 112,500 112,500 103,125 Revenues $42,080 $1,000 F (A) $1,400 U (B) Variable Costs (C) $200 U $15,860 $2,340 F $18,200 Fixed Costs $8,280 $860 F $9,140 $9,140 Operating Income $17,740 (D) $16,080 (E) $15,140 Required What are the respective flexible-budget revenues (A)? What are the static-budget revenues (B)? What are the actual variable costs (C) What is the total flexible-budget variance (D)? What is the total sales-volume variance (E)? What is the total static-budget variance?arrow_forward
- Problem 10-13 (Algo) Basic Variance Analysis; the Impact of Variances on Unit Costs [LO10-1, LO10-2, LO10-3] Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May. Standard Cost per Unit Actual Cost per Unit Direct materials: Standard: 1.90 feet at $3.40 per foot $ 6.46 Actual: 1.85 feet at $3.80 per foot $ 7.03 Direct labor: Standard: 0.95 hours at $20.00 per hour 19.00 Actual: 1.00 hours at $19.50 per hour 19.50 Variable overhead: Standard: 0.95 hours at $7.00 per hour 6.65 Actual: 1.00 hours at $6.60 per hour 6.60 Total cost per unit $ 32.11 $ 33.13 Excess of actual cost over standard cost per unit $ 1.02 The production superintendent was pleased when he saw this report and commented: “This $1.02 excess cost is well within the 4 percent limit management has set for acceptable variances. It's obvious…arrow_forwardQuestion 4- Variance Analysis Required: The owners can see that the company sold a different amount of units than budgeted. They have asked vou to determine the flexible budget amounts and calculate the variances when comparing the flexible budget to the actual results S marksl. Flexible Budget Report Variance (show Static Flexible or Budget Budget Actual as positive Unfavorable Amount Amount Results amount) (U) Sales in Linits 6,500 6,200 Sales $ 650,000 650,000 Variable Cost 260,000 275,500 Foed Cost 26,000 25,000 Jet Operating Income 364 000 349,500arrow_forward9 Evaluating Variances from Standard Costs Obj. 6 MAD 9-4 Analyze Maywood City Police Department's labor time variance frequency to establish the expected cost to serve these activities. Actual Activities Total Employee for Year Standard Hours Hours Police Activity per Activity 7,000 4,200 Theft 0.60 18,000 27,000 Arrest 1.50 9,000 2,700 Patrol activities 0.30 33,900 The police are paid $25 per hour. The actual amount of hours per activity for the year were as follows: Police Activity Actual Hours per Activity Theft 0.75 Arrest 2.00 Patrol activities 0.40 a. Determine the total budgeted cost to perform the three police activities. b. Determine the total actual cost to perform the three police activities. C. Determine the direct labor time variance. d. What does the time variance suggest?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY