Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Chapter 9, Problem 1CE
1.
To determine
Compute the number of quarts of oil used for 980 oil changes (standard quantity).
2.
To determine
Compute the number of direct labor hours used for 980 oil changes (standard hours).
3.
To determine
Calculate the new standard quantities if 970 oil changes in June instead of 980 and indicate the calculated standard quantities of oil and direct labor hours be higher or lower than the amounts calculated in Requirement 1&2.
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Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for automobiles and light trucks. On average, Guillermo has found that a typical oil change takes 30 minutes and 6.2 quarts of oil are used. In June, Guillermo's Oil and Lube had 960 oil changes.
Guillermo's Oil and Lube Company provided the following information for the production of oil changes during the month of June:Actual number of oil changes performed: 960Actual number of direct labor hours worked: 472 hoursActual rate paid per direct labor hour: $14.50Standard rate per direct labor hour: $14.00
Required:
If required, round your answers to the nearest cent.
1. Calculate the direct labor rate variance (LRV) and the direct labor efficiency variance (LEV) for June using the formula approach.
Direct labor rate variance (LRV)
$______
Fvaorable or Unfavorable
Direct labor efficiency variance (LEV)
$_______
Favorable or Unfavorable
2. Calculate the total direct labor variance for…
Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for automobiles and light trucks. On average, Guillermo has found that a typical oil change takes 30 minutes and 6.4 quarts of oil are used. In June, Guillermo's Oil and Lube had 1,000 oil changes.
Guillermo's Oil and Lube Company provided the following information for the production of oil changes during the month of June:
Actual number of oil changes performed: 1,000Actual number of quarts of oil used: 6,960 quartsActual price paid per quart of oil: $5.30Standard price per quart of oil: $5.25
1. What if the actual number of quarts of oil purchased in June had been 6880 quarts, and the materials price variance was calculated at the time of purchase? If required, round your answers to the nearest cent.
What would be the materials price variance (MPV)?
What would be the materials usage variance (MUV)?
Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for automobiles and light trucks. On average, Guillermo has found that a typical oil change takes 20 minutes and 6.6 quarts of oil are used. In June, Guillermo's Oil and Lube had 920 oil changes.
Guillermo's Oil and Lube Company provided the following information for the production of oil changes during the month of June:
Actual number of oil changes performed: 920Actual number of quarts of oil used: 6,580 quartsActual price paid per quart of oil: $5.00Standard price per quart of oil: $4.95
Required:
1. Calculate the direct materials price variance (MPV) and the direct materials usage variance (MUV) for June using the formula approach. If required, round your answers to the nearest cent.
MPV
(Favorable/Unfavorable)
MUV
(Favorable/Unfavorable)
2. Calculate the total direct materials variance for oil for June. If required, round your answer to the nearest cent.…
Chapter 9 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 9 - Discuss the difference between budgets and...Ch. 9 - What is the quantity decision? The pricing...Ch. 9 - Why is historical experience often a poor basis...Ch. 9 - Prob. 4DQCh. 9 - How does standard costing improve the control...Ch. 9 - The budget variance for variable production costs...Ch. 9 - Explain why the direct materials price variance is...Ch. 9 - The direct materials usage variance is always the...Ch. 9 - The direct labor rate variance is never...Ch. 9 - Prob. 10DQ
Ch. 9 - Prob. 11DQCh. 9 - What is the cause of an unfavorable volume...Ch. 9 - Prob. 13DQCh. 9 - Explain how the two-, three-, and four-variance...Ch. 9 - Prob. 15DQCh. 9 - Prob. 1CECh. 9 - Direct Materials Usage Variance Refer to...Ch. 9 - Refer to Cornerstone Exercise 9.1. Guillermos Oil...Ch. 9 - Kavallia Company set a standard cost for one item...Ch. 9 - Yohan Company has the following balances in its...Ch. 9 - Standish Company manufactures consumer products...Ch. 9 - Variances Refer to Cornerstone Exercise 9.6....Ch. 9 - Standish Company manufactures consumer products...Ch. 9 - Mangia Pizza Company makes frozen pizzas that are...Ch. 9 - Mangia Pizza Company makes frozen pizzas that are...Ch. 9 - Refer to Cornerstone Exercise 9.9. Required: 1....Ch. 9 - Quincy Farms is a producer of items made from farm...Ch. 9 - During the year, Dorner Company produced 280,000...Ch. 9 - Zoller Company produces a dark chocolate candy...Ch. 9 - Oerstman, Inc., uses a standard costing system and...Ch. 9 - Refer to the data in Exercise 9.15. Required: 1....Ch. 9 - Chypre, Inc., produces a cologne mist using a...Ch. 9 - Refer to Exercise 9.17. Chypre, Inc., purchased...Ch. 9 - Delano Company uses two types of direct labor for...Ch. 9 - Jameson Company produces paper towels. The company...Ch. 9 - Madison Company uses the following rule to...Ch. 9 - Laughlin, Inc., uses a standard costing system....Ch. 9 - Responsibility for the materials price variance...Ch. 9 - Which of the following is true concerning labor...Ch. 9 - A company uses a standard costing system. At the...Ch. 9 - Relevant information for direct labor is as...Ch. 9 - Which of the following is the most likely...Ch. 9 - Haversham Corporation produces dress shirts. The...Ch. 9 - Plimpton Company produces countertop ovens....Ch. 9 - Algers Company produces dry fertilizer. At the...Ch. 9 - Misterio Company uses a standard costing system....Ch. 9 - Petrillo Company produces engine parts for large...Ch. 9 - Business Specialty, Inc., manufactures two...Ch. 9 - Vet-Pro, Inc., produces a veterinary grade...Ch. 9 - Refer to the data in Problem 9.34. Vet-Pro, Inc.,...Ch. 9 - Energy Products Company produces a gasoline...Ch. 9 - Nuevo Company produces a single product. Nuevo...Ch. 9 - Ingles Company manufactures external hard drives....Ch. 9 - As part of its cost control program, Tracer...Ch. 9 - Aspen Medical Laboratory performs comprehensive...Ch. 9 - Leather Works is a family-owned maker of leather...
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