Managerial Accounting
7th Edition
ISBN: 9781260247886
Author: Wild
Publisher: MCG
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Chapter 8, Problem 6PSA
Problem 21-6AA Materials, labor, and overhead variances recorded and analyzed C1 P5
Boss Company’s
| Standard direct materials cost……………………………………………. | $ 100.000 |
| Direct materials quantity variance (unfavorable)……………………….. | 3.000 |
| Direct materials price variance (favorable) ……………………………….. | 500 |
| Actual direct labor cost ……………………………………………………. | 90.000 |
| Direct labor efficiency variance (favorable) ………………………………. | 7.000 |
| Direct labor rato variance (unfavorable). ………………………………….. | 1.200 |
| Actual overhead cost ………………………………………………………. | 375.000 |
| Volume variance (unfavorable) ……………………………………………. | 12.000 |
| Controllable variance (unfavorable)………………………………………….. | 9.000 |
Required
- Prepare December 31 journal entries to record the company’s costs and variances for the month. (Do not prepare the
journal entry to close the variances.) Check (1) Dr. Work in process Inventory (for overhead), $354.000
- Identify the variances that would attract the attention of a manager who uses management by exception. Explain what action (s) the manager should consider.
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Problem 3: Overhead Costs Variances
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3 Jailene Inc allocates overhead costs using the direct labor hour as the allocation base. It has provided the following manufacturing overhead data:
4
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Data
6
Number of production units
7 Direct labor hour (DLH)* per unit
8 Total direct labor hours
9 VMOH
10 FMOH
11 Total MOH
12 Standard VMOH rate per hour
13 Standard FMOH rate per hour
14 MOH rate per hour
15
16
Actual
Budgeted or Standard
53,000
50000 units
0.55
29,150
$145,000
0.72 DLH per unit
36,000 DLH
$144,000
$65,000
210,000
$72,000
216,000
$4.00 per hour
$2.00 per hour
$6.00 per hour
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17 Required:
18 A. Calculate Variable MOH flexible budget cost variance.
19 B. Calculate Fixed MOH volume variance.
20 C. Calculate the total MOH variance.
21
22 Solution:
23 A. Variable MOH flexible budget cost variance = Actual Variable MOH costs - Budgeted Variable MOH costs
24 Actual…
variance report LO P1, P2, P3, P4
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and overhead
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ferences
Antuan Company set the following standard costs per unit for its product.
Direct materials (3.0 pounds @ $6.00
Direct labor (1.7 hours $13.00
Overhead (1.7 hours $18.50 per hour
Standard cost per unit
$ 18.00
The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level of 75% of the factory's
capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month at the 75% capacity
level.
Overhead Budget (75% Capacity)
Variable overhead costs
Indirect materials
Indirect labor
15.000
Power
Maintenance
000
$0.000
Total variable overhead costs
135,000
Fixed overhead costs
Depreciation-Building
24.000
1701800
17.000
225.750
13361750
$ 471,750
Depreciation-Machinery
Taxes and insurance
Supervisory salaries
Total fixed overhead costs
Total overhead costs
The company incurred the…
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Question 2
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Current Attempt in Progress
The per unit standards for direct labor are 2 direct labor
hours per unit at $12 per hour. If the actual direct labor
payroll cost was $25,600 for 2,000 direct labor hours
worked to produce 1,200 units, the total direct labor
variance is
O $1,000 unfavorable.
O $3,200 unfavorable.
O $960 unfavorable.
O $3.200 favorable.
Chp
Chapter 8 Solutions
Managerial Accounting
Ch. 8 - Prob. 1MCQCh. 8 - Prob. 2MCQCh. 8 - Prob. 3MCQCh. 8 - A Company’s standard for a unit of its single...Ch. 8 - Prob. 5MCQCh. 8 - Prob. 1DQCh. 8 - Prob. 2DQCh. 8 - Prob. 3DQCh. 8 - Prob. 4DQCh. 8 - Prob. 5DQ
Ch. 8 - Prob. 6DQCh. 8 - Prob. 7DQCh. 8 - Prob. 8DQCh. 8 - Prob. 9DQCh. 8 - Prob. 10DQCh. 8 - Prob. 11DQCh. 8 - Prob. 12DQCh. 8 - Prob. 13DQCh. 8 - Prob. 14DQCh. 8 - Prob. 15DQCh. 8 - Prob. 16DQCh. 8 - Prob. 17DQCh. 8 - Prob. 18DQCh. 8 - Prob. 1QSCh. 8 - Prob. 2QSCh. 8 - Prob. 3QSCh. 8 - Prob. 4QSCh. 8 - Prob. 5QSCh. 8 - Prob. 6QSCh. 8 - Prob. 7QSCh. 8 - Prob. 8QSCh. 8 - Prob. 9QSCh. 8 - Materials cost variances P2 Juan Company’s output...Ch. 8 - Prob. 11QSCh. 8 - Prob. 12QSCh. 8 - Prob. 13QSCh. 8 - Prob. 14QSCh. 8 - Prob. 15QSCh. 8 - Prob. 16QSCh. 8 - A Preparing overhead entries P5 Refer to the...Ch. 8 - A Total variable overhead cost variance P4 Mosaic...Ch. 8 - A Overhead spending and efficiency variances P4...Ch. 8 - Computing sales price and volume variances A1...Ch. 8 - Sales variances A1 In a recent year, BMW sold...Ch. 8 - Prob. 22QSCh. 8 - Prob. 23QSCh. 8 - Prob. 24QSCh. 8 - Prob. 1ECh. 8 - Prob. 2ECh. 8 - Prob. 3ECh. 8 - Prob. 4ECh. 8 - Prob. 5ECh. 8 - Prob. 6ECh. 8 - Prob. 7ECh. 8 - Exercise 21-8 Standard unit cost; total variance...Ch. 8 - Prob. 9ECh. 8 - Prob. 10ECh. 8 - Prob. 11ECh. 8 - Prob. 12ECh. 8 - Prob. 13ECh. 8 - Exercise 21-14A Materials variances recorded and...Ch. 8 - Prob. 15ECh. 8 - Prob. 16ECh. 8 - Prob. 17ECh. 8 - Prob. 18ECh. 8 - Exercise 21-19 Computation of total overhead rate...Ch. 8 - Exercise 21-20 Computation of volume and...Ch. 8 - Exercise 21-21 Overhead controllable and volume...Ch. 8 - Prob. 22ECh. 8 - Exercise 21-23 Computing and interpreting sales...Ch. 8 - Prob. 1PSACh. 8 - Prob. 2PSACh. 8 - Prob. 3PSACh. 8 - Prob. 4PSACh. 8 - Prob. 5PSACh. 8 - Problem 21-6AA Materials, labor, and overhead...Ch. 8 - Prob. 1PSBCh. 8 - Prob. 2PSBCh. 8 - Prob. 3PSBCh. 8 - Prob. 4PSBCh. 8 - Prob. 5PSBCh. 8 - Problem 21-6BA Materials, labor, and overhead...Ch. 8 - Prob. 8SPCh. 8 - Flexible budgets and standard costs emphasize the...Ch. 8 - Prob. 2AACh. 8 - Prob. 3AACh. 8 - Prob. 1BTNCh. 8 - The reason we use the words favorable when...Ch. 8 - Prob. 3BTNCh. 8 - Prob. 4BTNCh. 8 - Prob. 5BTNCh. 8 - Prob. 6BTN
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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
- D Question 13 Five Rings, Inc, has collected the following data on one of its products: Direct materials standard (3 lbs.@ $.75/b.) Total direct materials cost variance- unfavorable Actual direct materials used Actual finished units produced The actual cost of the direct materials used is: O $85,450 O $165,000 O $120,800 O $176,200 O $132,000 Question 14 F2 F3 -O+ F6 $2.25per finished unit $11.200 165,000 lbs 33,000 units F7 F8arrow_forwardRecording standards in accounts Cioffi Manufacturing Company incorporates standards in its accounts and identifies variances at the time the manufacturing costs are incurred. Journalize the entries to record the following transactions: A. Purchased 2,450 units of copper tubing on account at 52.00 per unit. The standard price is 48.50 per unit. B. Used 1,900 units of copper tubing in the process of manufacturing 200 air conditioners. Ten units of copper tubing are required, at standard, to produce one air conditioner.arrow_forwardRecording standards in accounts Cioffi Manufacturing Company incorporates standards in its accounts and identifies variances at the time the manufacturing costs are incurred. Journalize the entries to record the following transactions: a.Purchased 2,450 units of copper tubing on account at 52.00 per unit. The standard price is 48.50 per unit. b.Used 1,900 units of copper tubing in the process of manufacturing 200 air conditioners. Ten units of copper tubing are required, at standard, to produce one air conditioner.arrow_forward
- Variance interpretation You have been asked to investigate some cost problems in the Assembly Department of Ruthenium Electronics Co., a consumer electronics company. To begin your investigation, you have obtained the following budget performance report for department for the last quarter: The following reports were also obtained: You also interviewed the Assembly Department supervisor. Excerpts from the interview follow: Q: What explains the poor performance in your department? A: Listen, you've got to understand what it's been like in this department recently. Lately, it seems no matter how hard we try, we can't seem to make the standards. I'm not sure what is going on, but we've been having a lot of problems lately. Q: What kind of problems? A: Well, for instance, all this quarter we've been requisitioning purchased parts from the material storeroom, and the pans just didn't fit together very well I'm not sure what is going on. but during most of this quarter we've had to scrap and sort purchased pansjust to get our assemblies put together. Naturally, all this takes time and material. And that's not all. Q: Go on. A: All this quarter, the work that we've been receiving from the Fabrication Department has been shoddy. I mean, maybe around 20% of the stuff that comes in from Fabrication just can't be assembled. The fabrication is all wrong. As a result, we've had to scrap and rework a lot of the stuff. Naturally, this has just shot our quantity variances. Interpret the variance reports in light of the comments by the Assembly Department supervisor.arrow_forwardRecording standards in accounts Cioffi Manufacturing Company incorporates standards in its accounts and identifies variances at the time the manufacturing costs are incurred. Journalize the entries to record the following transactions: A. Purchased 2,450 units of copper tubing on account at 52.00 per unit. The standard price is 48.50 per unit. B. Used 1,900 units of copper tubing in the process of manufacturing 200 air conditioners. Ten units of copper tubing are required, at standard, to produce one air conditioner.arrow_forwardDirect labor time variance Maywood City Police uses variance analysis to monitor police staffing. The following table identifies three common police activities, the standard time to perform each activity, and their actual frequency to establish the expected cost to serve these activities. Police Activity Standard Hours per Activity Actual Activities for Year Total Employee Hours Theft 0.60 7,000 4,200 Arrest 1.50 18,000 27,000 Patrol activities 0.30 9,000 2,700 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
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