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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Textbook Question
Chapter 15, Problem 15.14E
Exercise 15.14
LO 4, 5
Direct material variances-solving for price and usage variances Fiberworks Company is a manufacturer of fiberglass toy boats. The company has recently implemented a
| Direct materials (fiberglass) purchased | 200,000 pounds |
| Direct materials issued into production | 180,000 pounds |
| Standard pounds allowed per boat | 1.75 pounds |
| Standard price per pound | $7.00 |
| Cost of fiberglass purchased | $1,420,000 |
Required:
- Calculate the actual cost per pound of fiberglass purchased during May.
- Calculate the direct materials purchase price variance for May.
- Calculate the direct materials usage variance for May.
- Comment on calculating the material price variance based on pounds purchased rather than pounds issued into production.
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Exercise 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.
Subm
The standards for product V28 call for 8.0 pounds of a raw material that costs $18.80 per pound. Last month, 1,900 pounds of the raw
material were purchased for $35,340. The actual output of the month was 210 units of product V28. A total of 1,800 pounds of the raw
material were used to produce this output.
The direct materials purchases variance is computed when the materials are purchased.
Required:
a. What is the materials price variance for the month?
b. What is the materials quantity variance for the month?
Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero
variance). Input all amounts as positive values.
a. Materials price variance
b. Materials quantity variance
Question 3
Owen plc manufactures one product, and the entire product is sold as soon as it is
produced. The company operates a standard costing system and analysis of
variances is made every month. The standard cost card for a product is as follows.
Materials (4 Kg at £4 per Kg)
Labour (4 Hours at £5 per hr)
Variable overheads (5 hrs at £2 per hr)
Fixed overheads (6 hrs at £3 per hr)
Budgeted selling price is £80 per unit
Budgeted production
Budgeted sales
There is no opening inventory
The actual results are as follows:
Sales: 8,400 units for £613,200
Production: 9,900 units
Actual costs:
Materials (35,464 kg): £163,455
Labour: £ 234,515
Variable overheads: £97,348
Fixed overheads: £ 144,074
£ per Unit
16
20
10
18
£64
8.900 units
8,200 units
Required:
a) Prepare a flexed budget and calculate the total variances
b) Using the data, analyse each of the cost variances: Materials; Labour;
Variable Overheads and; Fixed Overheads
c) Using data, calculate the Sales price variance and the Sales…
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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