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 9E
To determine
(a)
Concept introduction:
Fixed
It is the difference between budgeted fixed overhead and actual fixed overhead.
To compute:
The fixed overhead spending variances of P P.
To determine
(b)
Concept introduction:
Fixed overhead volume variance:
It is the difference between fixed overhead rate multiplied with actual volume and fixed overhead rate multiplied with budgeted volume.
To compute:
The fixed overhead volume variance.
To determine
(c)
Concept introduction:
Total of fixed overhead spending variance and fixed overhead volume variance is used to calculate over or under applied fixed manufacturing overhead.
To compute:
The over and under applied fixed manufacturing overhead.
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Computing and journalizing standard cost variances
McKnight manufactures coffee mugs that it sells to other companies for customizing with
their own logos. McKnight prepares flexible budgets and uses a standard cost system to
control manufacturing costs. The standard unit cost of a coffee mug is based on static budget
volume of 59,800 coffee mugs per month:
Direct Materials (0.2 lbs. @ $0.25 per Ib.)
$ 0.05
Direct Labor (3 minutes @ $0.11 per minute)
0.33
Manufacturing Overhead:
Variable (3 minutes @ $0.06 per minute)
$ 0.18
Fixed (3 minutes @ $0.15 per minute)
0.45
0.63
Total Cost Per Coffee Mug
$ 1.01
Actual cost and production information for July 2020 follow:
а.
Actual production and sales were 62,500 coffee mugs.
b. Actual direct materials usage was 10,000 Ibs. at an actual cost of $0.17 per Ib.
Actual direct labor usage of 198,000 minutes at a cost of $25,740.
d. Actual overhead cost was $8,500 variable and $32,100 fixed.
e. Selling and administrative costs were $110,000.
C.
Compute the net overhead variance (indicate over-or underapplied manufacturing overhead)
For fixed overhead costs, compute the spending and the production-volume variances.
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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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
- Fixed Overhead Spending and Volume Variances, Columnar and Formula Approaches Corey Company provided the following information: Required: 1. Using the columnar approach, calculate the fixed overhead spending and volume variances. 2. Using the formula approach, calculate the fixed overhead spending variance. 3. Using the formula approach, calculate the fixed overhead volume variance. 4. Calculate the total fixed overhead variance.arrow_forwardA. Describe the two variances between the actual costs and the standard costs for factory overhead. B. What is a factory overhead cost variance report?arrow_forwardIf variances are recorded in the accounts at the time the manufacturing costs are incurred, what does a debit balance in Direct Materials Price Variance represent?arrow_forward
- The fixed factory overhead variance is caused by the difference between which of the following? A. actual and standard allocation base B. actual and budgeted Units C. actual fixed overhead and applied fixed overhead D. actual and standard overhead ratesarrow_forwardFor fixed setup overhead costs, compute the spending and the production-volume variances.arrow_forwardQ) Prepare journal entries for variable and fixed manufacturing overhead costs and variances;write off these variances to cost of goods sold.arrow_forward
- A.compute all materials and labor variances B. Compute total overhead variancearrow_forwardDeluxe, Inc. produced 1,000 units of the company's product in 2018. The standard quantity of direct materials was three yards of cloth per unit at a standard cost of $1.05 per yard. The accounting records showed that 2,600 yards of cloth were used and the company paid $1.10 per yard. Standard time was two direct labor hours per unit at a standard rate of $10.75 per direct labor hour. Employees worked 1,400 hours and were paid $10.25 per hour. Read the requirements. Requirement 1. What are the benefits of setting cost standards? Standard costing helps managers do the following: Requirement 2. Calculate the direct materials cost variance and the direct materials efficiency variance as well as the direct labor cost and efficiency variances. Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC actual cost; AQ = actual…arrow_forwardDetermine a detailed list of possible causes of any material, labour or fixed overhead cost variances.arrow_forward
- Under Standard Costing System, direct material price variance shall be appropriately computed using A. Actual direct materials usedB. Actual direct materials purchasedC. Actual direct materials wastedD. Actual direct materials converted to work in processarrow_forwardQ.Prepare journal entries for manufacturing overhead costs and their variancesarrow_forwardCompute materials price variance and materials quantity variance. (Assume that the materials price variance is computed at the time of purchase.) Compute direct labor rate varianceand direct labor efficiency variance. Compute variable overhead spending varianceand variable overhead efficiency variance.arrow_forward
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