Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
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Chapter 15, Problem 15.13E
Exercise 15.13
LO 4. 5
Direct material variances-solving for unknowns Oakwood, Inc., manufactures end tables, armchairs, and other wood furniture products from high-quality materials. The company uses a
| Units produced | 1,500 armchairs |
| Direct materials purchased | 19,000 board feet |
| Direct materials issued into production | 17,200 board feet |
| Standard cost per unit (12 board feet × $8) | $96 per unit produced |
| Purchase price variance | $2,850 unfavorable |
Required:
- Calculate the actual price paid per board foot purchased.
- Calculate the standard quantity of materials allowed (in board feet) for the number of units produced.
- Calculate the direct materials usage variance.
- What is the most likely explanation for the price and usage variances? Is this a good trade-off for management of Oakwood, Inc., to make? Explain your answer.
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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…
2
The following company information is available for March. The direct materials price variance is:
Direct materials purchased and used
Standard costs for direct materials for March production
Multiple Choice
$9,200 unfavorable.
$9,200 favorable.
$9,000 favorable.
4,500 feet @ $98 per foot
4,600 feet @ $96 per foot
AIP 11.5 Overhead Variances LO 2, 6, Appendix
Europa Sugar processes sugar beets into granulated sugar that is sold to food
companies. It uses a standard cost system to aid in the control of costs and for
performance evaluation. To compute the standards for next year, the actual expense
incurred by expense category is divided by the number of tons of sugar beets processed
to arrive at a standard cost per ton. These per-ton standards then are increased by the
expected amount of inflation forecast for that expense category. This year, Europa
Sugar processed 6.3 million tons of beets. The calculation of next year's standard costs
is as follows:
Europa Sugar
Standard Costs for Next Year
(thousands of euros)
Cost per
Ton
This Year's
Inflation Standard Cost
Cost
Adjusment
per Ton
Direct labor
€ 33,000
€0.524
4.0%
€0.544
Sugar beets
58,000
0.921
3.5
0.953
Variable overhead
24,000
0.381
5.0
0.400
Fixed overhead
43,000
0.683
2.0
0.696
Total
€158,000
€2.509
€2.593
Next year, actual production is…
Chapter 15 Solutions
Accounting: What the Numbers Mean
Ch. 15 - Prob. 15.1MECh. 15 - Prob. 15.2MECh. 15 - Prob. 15.3MECh. 15 - Prob. 15.4MECh. 15 - Mini-Exercise 15.5 LO 4, 5, 6 Variable overhead...Ch. 15 - Mini-Exercise 15.6
LO 4. 5, 6
Fixed overhead...Ch. 15 - Prob. 15.7ECh. 15 - Prob. 15.8ECh. 15 - Prob. 15.9ECh. 15 - Prob. 15.10E
Ch. 15 - Prob. 15.11ECh. 15 - Prob. 15.12ECh. 15 - Exercise 15.13 LO 4. 5 Direct material...Ch. 15 - Exercise 15.14 LO 4, 5 Direct material...Ch. 15 - Prob. 15.15ECh. 15 - Prob. 15.16ECh. 15 - Exercise 15.17 LO 9 Investment center analysis;...Ch. 15 - Prob. 15.18ECh. 15 - Problem 15.19 LO 4. 5 Calculate variable cost...Ch. 15 - Problem 15.20 LO 4. 5 Calculate variable cost...Ch. 15 - Problem 15.21 LO 4, 5 Direct labor...Ch. 15 - Problem 15.22 LO 4, 5 Direct labor...Ch. 15 - Problem 15.23 LO 5, 6 Fixed overhead...Ch. 15 - Case 15.25 LO 3 Performance reporting The chair of...Ch. 15 - Case 15.26 LO 3 Flexible budgeting One of the...Ch. 15 - Case 15.27 LO 4 Frequency of performance reporting...Ch. 15 - Case 15.28 LO 5 Rank the importance of eight...Ch. 15 - Case 15.29 LO 4. 5 Direct material variances-the...Ch. 15 - Case 15.30 LO 5 Evaluate the effects of erroneous...Ch. 15 - Prob. 15.31CCh. 15 - Case 15.32 The planning and control environment:...
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What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY