Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Textbook Question
Chapter 9, Problem 3PB
Direct materials, direct labor, and
Road Gripper Tire Co. manufactures automobile tires.
Instructions
Determine (A) the direct materials price variance, direct materials quantity variance, and total direct materials cost variance; (B) the direct labor rate variance, direct labor time variance, and total direct labor cost variance; and (C) the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance.
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The following information relates to production activities of Mercer Manufacturing for the year.
Actual direct materials used
Actual direct labor used
Actual units produced
Standard quantity and price per unit for direct materials
Standard quantity and rate per unit for direct labor
AR = Actual Rate
SR = Standard Rate
AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price
(1) Compute the direct materials price and quantity variances.
(2) Compute the direct labor rate and efficiency variances.
17,600 pounds at $4.85 per pound
18,235 hours at $35 per hour
33,200
0.50 pound at $4.80 per pound
0.50 hour at $36 per hour
Following information has been obtained from the records of a manufacturing organisation using the
standard costing system.
Standard
Actual
Production (units)
Working days
Fixed overheads ($)
Variable overheads ($)
4,000
3,800
20
21
40,000
39,000
12,000
12,000
You are required to calculate the following overhead variances :
(1)
(1I)
Fixed overhead variances : (a) Expenditure variances; (b) Volume Variances;
(c) Efficiency variances; (d) Calendar variances.
Variable overheads variance;
Pickul Awning manufactures awnings and uses a standard cost system. The company allocates overhead based on the number of direct labor hours. The following are the
company's cost and standards data:
(Click the icon to view the standards.)
Requirement 1. Calculate the standard cost of one awning.
Standard cost
Direct materials
Direct labor
Variable MOH
Fixed MOH
Total standard cost
Standard cost per unit
Requirement 2a. Calculate the direct material variances. (Enter the variances as positive numbers. Enter currency amounts to the nearest cent and your answers to the nearest whole dollar. Label the variance as fa
First determine the formula for the price variance, then compute the price variance for direct materials.
Determine the formula for the quantity variance, then compute the quantity variance for direct materials.
= DM price variance
) =
First determine the formula for the efficiency variance, then compute the efficiency variance for direct labor.
x(
x(
x (
x(
= DM quantity…
Chapter 9 Solutions
Managerial Accounting
Ch. 9 - What are the basic objectives in the use of...Ch. 9 - What is meant by reporting by the principle of...Ch. 9 - What are the two variances between the actual cost...Ch. 9 - The materials cost variance report for Nickols...Ch. 9 - A. What are the two variances between the actual...Ch. 9 - Prob. 6DQCh. 9 - Would the use of standards be appropriate in a...Ch. 9 - A. Describe the two variances between the actual...Ch. 9 - At the end of the period, the factory overhead...Ch. 9 - If variances are recorded in the accounts at the...
Ch. 9 - Direct materials variances Bellingham Company...Ch. 9 - Direct labor variances Bellingham Company produces...Ch. 9 - Factory overhead controllable variance Bellingham...Ch. 9 - Factory overhead volume variance Bellingham...Ch. 9 - Standard cost journal entries Bellingham Company...Ch. 9 - Prob. 6BECh. 9 - Crazy Delicious Inc. produces chocolate bars. The...Ch. 9 - Prob. 2ECh. 9 - Salisbury Bottle Company manufactures plastic...Ch. 9 - The following data relate to the direct materials...Ch. 9 - De Soto Inc. produces tablet computers. The...Ch. 9 - Standard direct materials cost per unit from...Ch. 9 - H.J. Heinz Company uses standards to control its...Ch. 9 - Direct labor variances The following data relate...Ch. 9 - Glacier Bicycle Company manufactures commuter...Ch. 9 - Ada Clothes Company produced 40,000 units during...Ch. 9 - Prob. 11ECh. 9 - Direct materials and direct labor variances At the...Ch. 9 - Flexible overhead budget Leno Manufacturing...Ch. 9 - Prob. 14ECh. 9 - Factory overhead cost variances The following data...Ch. 9 - Thomas Textiles Corporation began November with a...Ch. 9 - Prob. 17ECh. 9 - Factory overhead cost variance report Tannin...Ch. 9 - Prob. 19ECh. 9 - Prob. 20ECh. 9 - Income statement indicating standard cost...Ch. 9 - Prob. 22ECh. 9 - Prob. 23ECh. 9 - Rosenberry Company computed the following revenue...Ch. 9 - Lowell Manufacturing Inc. has a normal selling...Ch. 9 - Shasta Fixture Company manufactures faucets in a...Ch. 9 - Flexible budgeting and variance analysis I Love My...Ch. 9 - Direct materials, direct labor, and factory...Ch. 9 - Factory overhead cost variance report Tiger...Ch. 9 - CodeHead Software Inc. does software development....Ch. 9 - Direct materials and direct labor variance...Ch. 9 - Flexible budgeting and variance analysis Im Really...Ch. 9 - Direct materials, direct labor, and factory...Ch. 9 - Factory overhead cost variance report Feeling...Ch. 9 - Prob. 5PBCh. 9 - Prob. 1COMPCh. 9 - Advent Software uses standards to manage the cost...Ch. 9 - Prob. 2MADCh. 9 - Prob. 3MADCh. 9 - Prob. 4MADCh. 9 - Ethics in action Dash Riprock is a cost analyst...Ch. 9 - Variance interpretation Vanadium Audio Inc. is a...Ch. 9 - MinnOil performs oil changes and other minor...Ch. 9 - Marten Company has a cost-benefit policy to...Ch. 9 - Prob. 3CMACh. 9 - JoyT Company manufactures Maxi Dolls for sale in...
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- Breakaway Companys labor information for May is as follows: A. What is the actual direct labor rate per hour? B. What is the standard direct labor rate per hour? C. What was the total standard direct labor cost for May? D. What was the direct labor rate variance for May?arrow_forwardWhich of the following is true concerning labor variances that are not material in amount? a. They are closed to Cost of Goods Sold. b. They are prorated among Work in Process, Finished Goods, and Cost of Goods Sold. c. They are prorated among Materials, Work in Process, Finished Goods, and Cost of Goods Sold. d. They are reported as part of Overall Variance on the balance sheet at the end of the year.arrow_forwardButrico Manufacturing Corporation uses a standard cost system, records materials price variances when direct materials are purchased, and prorates all variances at year-end. Variances associated with direct materials are prorated based on the balances of direct materials in the appropriate accounts, and variances associated with direct labor and manufacturing overhead are prorated to Finished Goods Inventory and to Cost of Goods Sold (CGS) on the basis of the relative direct labor cost in these accounts at year-end. The following information is for the year ended December 31: The company had no beginning inventories and no ending Work-in-Process (WIP) Inventory. It applies manufacturing overhead at 80% of standard direct labor cost. Finished goods inventory at 12/31: Direct materials $ 85,900 Direct labor 130,300 Applied manufacturing overhead 104,800 Direct…arrow_forward
- Butrico Manufacturing Corporation uses a standard cost system, records materials price variances when direct materials are purchased, and prorates all variances at year-end. Variances associated with direct materials are prorated based on the balances of direct materials in the appropriate accounts, and variances associated with direct labor and manufacturing overhead are prorated to Finished Goods Inventory and to Cost of Goods Sold (CGS) on the basis of the relative direct labor cost in these accounts at year-end. The following information is for the year ended December 31: The company had no beginning inventories and no ending Work-in-Process (WIP) Inventory. It applies manufacturing overhead at 80% of standard direct labor cost. Finished goods inventory at 12/31: Direct materials $ 87,000 Direct labor 130,500 Applied manufacturing overhead 104,400 Direct materials inventory at 12/31 65,000 Cost of goods sold for the year ended 12/31:…arrow_forwardButrico Manufacturing Corporation uses a standard cost system, records materials price variances when direct materials are purchased, and prorates all variances at year-end. Variances associated with direct materials are prorated based on the balances of direct materials in the appropriate accounts, and variances associated with direct labor and manufacturing overhead are prorated to Finished Goods Inventory and to Cost of Goods Sold (CGS) on the basis of the relative direct labor cost in these accounts at year-end. The following information is for the year ended December 31: The company had no beginning inventories and no ending Work-in-Process (WIP) Inventory. It applies manufacturing overhead at 80% of standard direct labor cost. Finished goods inventory at 12/31: Direct materials Direct labor Applied manufacturing overhead Direct materials inventory at 12/31 Cost of goods sold for the year ended 12/31: Direct materials Direct labor Applied manufacturing overhead Direct materials…arrow_forwardButrico Manufacturing Corporation uses a standard cost system, records materials price variances when direct materials are purchased, and prorates all variances at year-end. Variances associated with direct materials are prorated based on the balances of direct materials in the appropriate accounts, and variances associated with direct labor and manufacturing overhead are prorated to Finished Goods Inventory and to Cost of Goods Sold (CGS) on the basis of the relative direct labor cost in these accounts at year-end. The following information is for the year ended December 31: The company had no beginning inventories and no ending Work-in-Process (WIP) Inventory. It applies manufacturing overhead at 80% of standard direct labor cost. Finished goods inventory at 12/31: Direct materials $ 87,000 Direct labor 130,500 Applied manufacturing overhead 104,400 Direct materials inventory at 12/31 65,000 Cost of goods sold for the year ended 12/31:…arrow_forward
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What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY