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 15.19P
Problem 15.19
LO 4. 5
Calculate variable cost variances-explain results The standards for one case of Springfever Tonic are as follows:
| Direct materials | 4 lb @ $5.00/lb | = $20 |
| Direct labor | 3 hr @ $13.00/Ib | = $39 |
| Variable |
3 hr @ $6.00/Ib | = $18 |
During the week ended August 28, the following activity took place:
7,400 lb of raw materials were purchased for inventory at a cost of $4.95 per pound.
2,000 cases of finished product were produced.
8,300 lb of raw materials were used.
5,800 direct labor hours were worked at a total cost of $78,300.
$35,670 of actual variable overhead costs were incurred.
Required:
Calculate each of the following variances and provide plausible explanations for the results:
- Price variance for raw materials purchased.
- Raw materials usage variance.
- Direct labor rate variance.
- Direct labor efficiency variance.
- Variable overhead spending variance.
- Variable overhead efficiency variance.
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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,…
ssignment-Variance Analysis i
Saved
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
Standard Price
Standard
Hours
or Rate
$2.10 per pound
$5.00 per hour
Cost
$16.59
$ 2.50
Direct materials
7.90 pounds
0.50 hours
Direct labor
ok
During the most recent month, the following activity was recorded:
nces
a. 14,850.00 pounds of material were purchased at a cost of $2.00 per pound.
b. All of the material purchased was used to produce 1,500 units of Zoom.
C. 600 hours of direct labor time were recorded at a total labor cost of $4,200.
Required:
1. Compute the materials price and quantity variances for the month.
2. Compute the labor rate and efficiency variances for the month.
(For all requirements, 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…
Inputs
Direct materials
Direct labor
Variable manufacturing overhead
Actual results:
Actual output
Actual variable manufacturing overhead cost $
Actual direct materials cost
Actual direct labor cost
Standard Quantity
2.9 pounds
0.65 hours
0.65 hours
Actual Quantity
6,550 pounds
1,120 hours
Required:
Use the information above to calculate the variances.
2,120 units
7,260
$
$
$
$
$
Actual Price
3.97 per pound
21.35 per hour
Standard Price
4.15 per pound
22.00 per hour
5.89 per hour
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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