Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Chapter 8, Problem 5E

a.

To determine

Provide a standard cost summary providing the standard unit cost.

a.

Expert Solution
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Explanation of Solution

Materials—2 lb @ $8$16
Labor—1 hr @ $10$10
Factory overhead ($4,000÷1,000units)$4
Standard unit cost$30

Figure (1)

b.

To determine

Examine the variances for materials and labor.

b.

Expert Solution
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Explanation of Solution

Calculate material price variance:

Materialpricevariance=[(ActualPriceStandardPrice)×ActualQuantity]=[($8.50$8)×1,900]=$950U

Calculate materials quantity variance:

Materialsquantityvariance=[(ActualQuantityStandardQuantity)×Standardprice]=[1,900lb(1,100lb×2pounds)]×$8=$2,400F

Calculate Labor rate variance:

Laborratevariance =[(ActualPriceStandardPrice)×ActualQuantity]=[($10.20$10)×900]=$180U

Calculate labor efficiency variance:

laborefficiencyvariance=[(ActualQuantityStandardQuantity)×Standardprice]=[900(1,100×1lb)]×$10=$2,000F

c.

To determine

Prepare journal entries.

c.

Expert Solution
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Explanation of Solution

(1)

DateAccount Title and ExplanationDebit ($)Credit($)
 Work in Process (1,100×2lb×$8)$17,600 
 Materials Price Variance (1,900×$0.50)$950 
       Materials Quantity Variance (300×$8) $2400
       Materials (1,900×$8.50) $16,150
 (to record the entry for direct materials cost when the materials are issued into production)  

Table (1)

(2)

DateAccount Title and ExplanationDebit ($)Credit($)
 Work in Process (1,100×1hr×$10)$9,000 
 Labor Rate Variance (900×$.20)$180 
       Labor efficiency Variance (200×$10) $2,000
      Payroll (900×$10.20) $9,180
 (to record the entry for direct labor cost)  

Table (2)

(3)

DateAccount Title and ExplanationDebit ($)Credit($)
 Work in Process$4,400 
 

     Applied Factory overhead (1,100×$4)

( Refer to note)

 $4,400
 (to record the entry applying factory overhead to work in process)  

Table (3)

Note: $4 is obtained by dividing $4,000 by 1,000 units.

d.

To determine

Prepare the journal entry.

d.

Expert Solution
Check Mark

Explanation of Solution

Case 1 and case 2:

DateAccount Title and ExplanationDebit ($)Credit($)
 Finished Goods (1,100×$30)$33,000 
      Work in process $33,000
 (to record the entry for finished goods at standard cost)  

Table (4)

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Chapter 8 Solutions

Principles of Cost Accounting

Ch. 8 - Prob. 11QCh. 8 - Prob. 12QCh. 8 - When a company uses a standard cost system, are...Ch. 8 - What two factors must be considered when breaking...Ch. 8 - What might cause the following materials...Ch. 8 - What might cause the following labor variances? An...Ch. 8 - Prob. 17QCh. 8 - Prob. 18QCh. 8 - Prob. 19QCh. 8 - Prob. 20QCh. 8 - When does a flexible-budget variance occur? Ch. 8 - Why is it important to determine flexible-budget...Ch. 8 - Prob. 23QCh. 8 - What is the significance of a production-volume...Ch. 8 - If production is more or less than the standard...Ch. 8 - At the end of the current fiscal year, the trial...Ch. 8 - What variances from the four-variance method are...Ch. 8 - What is the primary difference between the...Ch. 8 - What are the four variances in the four-variance...Ch. 8 - In all of the exercises involving variances, use F...Ch. 8 - Prob. 2ECh. 8 - Prob. 3ECh. 8 - Prob. 4ECh. 8 - Prob. 5ECh. 8 - Computing materials variances D-List Calendar Co....Ch. 8 - Computing labor variances LIFT Inc. manufactures...Ch. 8 - Standard cost summary; materials and labor cost...Ch. 8 - Computing labor variances Fill in the missing...Ch. 8 - Standard unit cost and journal entries The normal...Ch. 8 - Making journal entries Assume that during the...Ch. 8 - Using variance analysis and interpretation Last...Ch. 8 - Using variance analysis and interpretation Last...Ch. 8 - Journalizing standard costs in two departments...Ch. 8 - Calculating factory overhead The standard capacity...Ch. 8 - Determining Budgeted Overhead The overhead...Ch. 8 - Calculating factory overhead: two variances Munoz...Ch. 8 - Calculating factory overhead: two variances...Ch. 8 - The normal capacity of a manufacturing plant is...Ch. 8 - Calculating amount of factory overhead applied to...Ch. 8 - Georgia Gasket Co. budgets 8,000 direct labor...Ch. 8 - (Appendix) Calculating factory overhead: four...Ch. 8 - (Appendix) Calculating factory overhead: three...Ch. 8 - Materials and labor variances Branca Inspections...Ch. 8 - Materials and labor variances Fausto Fabricators...Ch. 8 - Zippy Inc. manufactures a fuel additive, Surge,...Ch. 8 - Calculation of materials and labor variances Fritz...Ch. 8 - High-End Products Inc. uses a standard cost system...Ch. 8 - RDI Products Co. manufactures a variety of...Ch. 8 - The standard cost summary for the most popular...Ch. 8 - Carlo Lee Corp. has established the following...Ch. 8 - USD Inc. has established the following standard...Ch. 8 - Allocation of variances Costa Brava Manufacturing...Ch. 8 - On May 1, Athens Inc. began the manufacture of a...Ch. 8 - The standard specifications for an electric motor...Ch. 8 - Cardiff Inc. manufactures men’s sport shirts for...Ch. 8 - Fargo Co. manufactures products in batches of 100...Ch. 8 - Prob. 15PCh. 8 - (Appendix) Overhead variances—four variance Mobile...Ch. 8 - Shinto Corp. uses a standard cost system and...Ch. 8 - Kamen Manufacturing Co. estimates the following...Ch. 8 - Prob. 19PCh. 8 - Jillian Manufacturing Inc. manufactures a single...Ch. 8 - Cost and production data for Binghamton Beverages...
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