Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Chapter 9.A, Problem 10P
Comprehensive
"Wonderful! Not only did our salespeople do a good job in meeting the sales budget this year, but our production people did a good job in controlling costs as well." said Kim Clark, president of Martell Company. "Our $ 18.300 overall
The following additional information is available for the year just completed:
a. The company manufactured 30.000 units of product during the year.
b. A total of 64.000 feet of material was purchased during the year at a cost of $8.55 per foot. All of this material was used to manufacture the 30,000 units produced. There were no beginning or ending inventories for the year.
c. The company worked 43,500 direct labor-hours during the year at a direct labor cost of $15.80 per hour.
d.
Required:
1. Compute the materials price and quantity variances for the year.
2. Compute the labor rate and efficiency variances for the year.
3. For manufacturing overhead compute:
a. The variable overhead rate and efficiency variances for the year.
b. The fixed overhead budget and volume variances for the year.
4. Total the variances you have computed and compare the net amount with the $18.300 mentioned by the president. Do you agree that bonuses should be given to everyone for good cost control during the year? Explain.
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"Wonderful! Not only did our salespeople do a good job in meeting the sales budget this year, but our production people did a good
job in controlling costs as well," said Kim Clark, president of Martell Company. "Our $34,400 overall manufacturing cost variance is only
1.0% of the $3,440,000 standard cost of products made during the year. That's well within the 3% parameter set by management for
acceptable variances. It looks like everyone will be in line for a bonus this year."
The company produces and sells a single product with a standard cost card as follows:
Inputs
Direct materials
Direct labor
Variable overhead
Fixed overhead
Total standard cost per unit
(1) Standard
Quantity or
Hours
4.50 feet
1.7 hours
1.7 hours
1.7 hours
(2) Standard Price Standard Cost
or Rate
$ 3.80 per foot
$ 11 per hour
$ 2.50 per hour
$ 5.50 per hour
(1) x (2)
$ 17.10
18.70
4.25
9.35
$ 49.40
The following additional information is available for the year just completed:
a. The company manufactured 15,000…
Revenue variances
Rockport Industries Inc. gathered the following data for
March:
Sales price per unit
Number of units of sales
Total sales
Planned
$150
x 12,500
Actual
$144
x 12,900
$1,875,000 $1,857,600
Enter a favorable variance as a negative number using a
minus sign and an unfavorable variance as a positive
number.
a. Compute the revenue price variance.
b. Compute the revenue volume variance.
$
c. Compute the total revenue variance.
Revenue variances
Rockport Industries Inc. gathered the following data for March:
Planned
Actual
Sales price per unit
$150
$144
Number of units of sales
× 12,500
× 12,900
Total sales
$1,875,000
$1,857,600
Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
a. Compute the revenue price variance.
$fill in the blank 1
b. Compute the revenue volume variance.
$fill in the blank 3
c. Compute the total revenue variance.
$fill in the blank 5
Chapter 9 Solutions
Introduction To Managerial Accounting
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