Managerial Accounting
3rd Edition
ISBN: 9780077826482
Author: Stacey M Whitecotton Associate Professor, Robert Libby, Fred Phillips Associate Professor
Publisher: McGraw-Hill Education
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Question
Chapter 9, Problem 9.2GAP
To determine
Concept introduction:
Direct labor variances:
Direct labor variances refer to the difference between the standard direct labor cost and actual direct labor cost incurred. Direct labor cost variances are categorized into following categories:
- Direct labor Rate variance: this variance shows the difference of standard rate and actual rate of labor. The formula to calculate this variance is as follows:
- Direct labor efficiency variance: this variance shows the difference of standard usage and actual usage of labor. The formula to calculate this variance is as follows:
- Direct labor cost or spending variance: this variance shows the difference of
standard cost and actual cost of labor. The formula to calculate this variance is as follows:
To calculate:
Direct labor rate, efficiency, and spending variances.
Expert Solution & Answer
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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…
Required information
Use the following information for the Exercises below. (Algo)
[The following information applies to the questions displayed below.]
A manufactured product has the following information for June.
Direct materials
Direct labor
Overhead
Units manufactured
Exercise 21-9 (Algo) Direct materials variances LO P3
AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price
Compute the (1) direct materials price variance and (2) direct materials quantity variance. (Indicate the effect of each variance by
selecting favorable, unfavorable, or no variance. Round "Cost per unit" answers to 2 decimal places.)
AQ
Actual Cost
X
X
59,900✔
Standard Quantity and Cost
7 pounds @ $8 per pound
2 DLH @ $17 per DLH
2 DLH @ $12 per DLH
485,190
AP ✓
$ 8.10
$ 5,990
AQ
59,900✔
✓$ 5,990
✓
X
X
Actual Results
59,900 pounds @ $8.10 per pound
16,600 hours @ $17.50 per hour
$ 209,600
8,500 units
$479,200
SP
$8.00
Direct materials price variance
Unfavorable
Unfavorable
Direct…
What are the equations to find these answers?
Calculate the direct materials price variance for March.
b.Calculate the direct materials quantity variance for March.
c.Calculate the direct labor rate variance for March.
d.Calculate the direct labor efficiency variance for March.
e.Calculate the variable overhead spending variance for March.
f.Calculate the variable overhead efficiency variance for March.
g.Calculate the fixed overhead spending variance for March.
Chapter 9 Solutions
Managerial Accounting
Ch. 9 - Briefly describe the difference between budgetary...Ch. 9 - What are standard costs? When are they set?Ch. 9 - Prob. 3QCh. 9 - Prob. 4QCh. 9 - Prob. 5QCh. 9 - Prob. 6QCh. 9 - Prob. 7QCh. 9 - Prob. 8QCh. 9 - Prob. 9QCh. 9 - How do the master budget, flexible budget, and...
Ch. 9 - Prob. 11QCh. 9 - What type of variance is calculated by comparing...Ch. 9 - Prob. 13QCh. 9 - Prob. 14QCh. 9 - Prob. 15QCh. 9 - Prob. 16QCh. 9 - Prob. 17QCh. 9 - Prob. 18QCh. 9 - What are the two variable overhead variances? What...Ch. 9 - Prob. 20QCh. 9 - Prob. 21QCh. 9 - Prob. 22QCh. 9 - Prob. 23QCh. 9 - Prob. 1MCCh. 9 - Prob. 2MCCh. 9 - Variances are always noted as favorable or...Ch. 9 - What type of budget is ail integrated set of...Ch. 9 - Prob. 5MCCh. 9 - Prob. 6MCCh. 9 - Prob. 7MCCh. 9 - Prob. 8MCCh. 9 - Prob. 9MCCh. 9 - Prob. 10MCCh. 9 - Prob. 1MECh. 9 - Creating Grading Scale Based on Ideal, Tight but...Ch. 9 - Prob. 3MECh. 9 - Prob. 4MECh. 9 - Calculating Unknown Values for Direct Labor...Ch. 9 - Prob. 6MECh. 9 - Prob. 7MECh. 9 - Prob. 8MECh. 9 - Prob. 9MECh. 9 - Prob. 10MECh. 9 - Prob. 11MECh. 9 - Prob. 12MECh. 9 - Preparing Journal Entries to Record Direct Labor...Ch. 9 - Prob. 1ECh. 9 - Prob. 2ECh. 9 - Interpreting Direct Materials Price, Quantity...Ch. 9 - Calculating Direct Materials and Direct Labor...Ch. 9 - Calculating Direct Materials and Direct Labor...Ch. 9 - Prob. 6ECh. 9 - Prob. 7ECh. 9 - Prob. 8ECh. 9 - Prob. 9ECh. 9 - Preparing Journal Entries to Record Direct...Ch. 9 - Prob. 11ECh. 9 - Calculating Fixed Manufacturing Overhead Spending,...Ch. 9 - Prob. 13ECh. 9 - Prob. 14ECh. 9 - Prob. 15ECh. 9 - Prob. 16ECh. 9 - Prob. 17ECh. 9 - Determining Actual, Standard Costs, and Variances...Ch. 9 - Prob. 1.1GAPCh. 9 - Prob. 1.2GAPCh. 9 - Prob. 1.3GAPCh. 9 - Prob. 2.1GAPCh. 9 - Prob. 2.2GAPCh. 9 - Prob. 2.3GAPCh. 9 - Prob. 3.1GAPCh. 9 - Prob. 3.2GAPCh. 9 - Prob. 3.3GAPCh. 9 - Prob. 4GAPCh. 9 - Prob. 5.1GAPCh. 9 - Prob. 5.2GAPCh. 9 - Prob. 5.3GAPCh. 9 - Prob. 6.1GAPCh. 9 - Prob. 6.2GAPCh. 9 - Prob. 6.3GAPCh. 9 - Prob. 7.1GAPCh. 9 - Prob. 7.2GAPCh. 9 - Prob. 7.3GAPCh. 9 - Preparing Journal Entries to Record Fixed...Ch. 9 - Prob. 9.1GAPCh. 9 - Prob. 9.2GAPCh. 9 - Prob. 10.1GAPCh. 9 - Prob. 10.2GAPCh. 9 - Prob. 1.1GBPCh. 9 - Prob. 1.2GBPCh. 9 - Prob. 1.3GBPCh. 9 - Prob. 2.1GBPCh. 9 - Prob. 2.2GBPCh. 9 - Prob. 2.3GBPCh. 9 - Prob. 3.1GBPCh. 9 - Prob. 3.2GBPCh. 9 - Prob. 3.3GBPCh. 9 - Prob. 4GBPCh. 9 - Prob. 5.1GBPCh. 9 - Prob. 5.2GBPCh. 9 - Prob. 5.3GBPCh. 9 - Prob. 6.1GBPCh. 9 - Prob. 6.2GBPCh. 9 - Prob. 6.3GBPCh. 9 - Prob. 7.1GBPCh. 9 - Prob. 7.2GBPCh. 9 - Prob. 7.3GBPCh. 9 - Prob. 8GBPCh. 9 - Prob. 9.1GBPCh. 9 - Prob. 9.2GBPCh. 9 - Calculating Variable Manufacturing Overhead, Fixed...Ch. 9 - Prob. 9.4GBPCh. 9 - Prob. 9.5GBPCh. 9 - Prob. 9.6GBPCh. 9 - Prob. 10.1GBPCh. 9 - Prob. 10.2GBP
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- Glacier Bicycle Company manufactures commuter bicycles from recycled materials. The following data for October are available: a. Determine for October the direct labor rate variance, direct labor time variance, and total direct labor cost variance. b. How much direct labor should be debited to Work in Process?arrow_forwardRequired information [The following information applies to the questions displayed below.] A manufactured product has the following information for June. Direct materials Direct labor Overhead Units manufactured AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price Actual Cost Compute the (1) direct materials price variance and (2) direct materials quantity variance. Note: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Round "Cost per unit" answers to 2 decimal places. $ GA Standard Quantity and Cost 6 pounds @ $8 per pound 3 DLH @ $17 per DLH 3 DLH @ $12 per DLH 0 $ Actual Results 47,400 pounds @ $8.10 per pound 23,100 hours @ $17.50 per hour $ 286,100 0 0 7,800 units S $ 0 Standard Costarrow_forwardEhrlich Inc. makes a product with the following standard costs for direct material and direct labor: Quantity/Hours Price /Rate Per Unit Direct Material 6.00 lbs $ 3.80 Direct Labor 1.5 hrs $ 16.00 During the most recent month, 6,300 units were produced. The costs associated with the month's production of this product were as follows: Quantity/Hours Price /Rate Materials purchased 42,000 lbs $3.00/per lbs. Materials used in production 32,000 lbs Direct labor 9,950 hrs $14.50/per hr.arrow_forward
- Making journal entries Assume that during the month of April the production report of Algonquin Adhesives Inc. in E8-10 revealed the following information: Make journal entries to charge materials (use the materials purchase price variance) and labor to Work in Process. (Remember to retrieve the standard costs from E8-10 before solving this exercise.)arrow_forwardKamen Manufacturing Co. estimates the following labor and overhead costs for the period: Required: Use the four-variance method for overhead analysis. Calculate the variances for direct labor and overhead. Prove that the overhead variances equal over- or underapplied factory overhead for the period.arrow_forwardMulliner Company showed the following information for the year: Required: 1. Calculate the standard direct labor hours for actual production. 2. Calculate the applied variable overhead. 3. Calculate the total variable overhead variance.arrow_forward
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