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 5CE
Yohan Company has the following balances in its direct materials and direct labor variance accounts at year-end:
Unadjusted Cost of Goods Sold equals $1,500,000, unadjusted Work in Process equals $236,000, and unadjusted Finished Goods equals $180,000.
Required:
- 1. Assume that the ending balances in the variance accounts are immaterial and prepare the
journal entries to close them to Cost of Goods Sold. What is the adjusted balance in Cost of Goods Sold after closing out the variances? - 2. What if any ending balance in a variance account that exceeds $10,000 is considered material? Close the immaterial variance accounts to Cost of Goods Sold and prorate the material variances among Cost of Goods Sold, Work in Process, and Finished Goods on the basis of prime costs in these accounts. The prime cost in Cost of Goods Sold is $1,050,000, the prime cost in Work in Process is $165,200, and the prime cost in Finished Goods is $126,000. What are the adjusted balances in Work in Process, Finished Goods, and Cost of Goods Sold after closing out all variances? (Round ratios to four significant digits. Round journal entries to the nearest dollar.)
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a) Refer to the information in Question 1 for data. Now, assume that Juju has decided to use a plantwide overhead rate based on the direct labor hours.Required:i) Calculate the predetermined plantwide overhead rate. (Note: Round to the nearest cent.)ii) Calculate the overhead applied to production for the month of Jun.iii) Calculate the overhead variance for the month of Jun.
Larson Manufacturing uses a standard cost system. The direct labor cost standard is $11.00 direct labor hour. The direct labor efficiency standard is 0.5 direct labor hour per unit. Actual direct labor for the month is 1,200 hours for a total cost of $18,000.00. Production for the
month was 3,100 units. The journal entry to record direct labor incurred but not paid would be:
O A. Work-in - Process Inventory
Direct Labor Cost Variance
Direct Labor Efficiency Variance
Wages Payable
O B. Work-in - Process Inventory
Direct Labor Cost Variance
Direct Labor Efficiency Variance
Wages Payable
O C. Work-in - Process Inventory
Direct Labor Cost Variance
Direct Labor Efficiency Variance
Wages Payable
O D. Work-in - Process Inventory
Direct Labor Cost Variance
Direct Labor Efficiency Variance
Wages Payable
18,000
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18,000
17,050
4,800
3,850
17,050
4.800
4.800
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-C
Example: To continue the example, assume XYZ Company incurred
$180,000 of manufacturing expenses and that actual machine hours were
25,000.
1. Calculate the actual overhead rate based on machine hours.
2. Assume the variance is not material to XYZ Company. What journal
entry would be made?
3. Assume the variance is material and that the applied overhead
included in the ending balances in the work-in-process, finished
goods, and cost of goods sold account is $50,000, $100,000, and
$350,000, respectively. What amount of variance should be allocated
to cost of goods sold?
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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What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY