Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 9.A, Problem 9P
Applying
Chilczuk. S.A., of Gdansk. Poland, is a major producer of classic Polish sausage, The company uses a
During the most recent year, the following operating results were recorded:
At the end of the year, the company's Manufacturing Overhead account contained the following data:
Management would like to determine the cause of the $15,400 underapplied overhead.
Required:
- Compute the predetermined overhead rate. Break the rate down into variable and fixed cost elements.
- Show how the $272,000 Applied figure in the Manufacturing Overhead account was computed.
- Breakdown the $15,400 underapplied overhead into four components: (1) variable overhead rate variance. (2) variable overhead efficiency variance. (3) fixed overhead
budget variance , and (4) fixed overhead volume variance. - Explain the meaning of each variance that you computed in (3) above.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Tharaldson Corporation makes a product with the following standard costs:
Standard Quantity or
Hours
5.6 ounces
0.3 hours
0.3 hours
Direct materials
Direct labor
Variable overhead
The company reported the following results concerning this product in June.
Originally budgeted output
Actual output
Raw materials used in production
Purchases of raw materials
Actual direct labor-hours
Actual cost of raw materials purchases
Actual direct labor cost
Actual variable overhead cost
Multiple Choice
O
O
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases
variance is computed when the materials are purchased.
The labor efficiency variance for June is:
O
O
$6,600 F
$6,600 U
Standard Price or Rate
$ 3.00 per ounce
$ 10.00 per hour
$7.00 per hour
$8,800 F
$8,800 U
4,000 units
4,000 units
22,000 ounces
22,700 ounces
540 hours
$ 42,700
$ 14,000
$ 4,000
Standard Cos
Per Unit
$ 16.80
$ 3.00
$ 2.10
Example-2Variable manufacturing overhead variance analysis. The Sourdough Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two direct-cost categories:
direct materials and direct manufacturing labor. Variable manufacturing overhead is allocated to products on the basis of standard direct manufacturing labor-hours. Following is some budget data for the Sourdough Bread Company:Direct manufacturing labor use 0.02 hours per baguetteVariable manufacturing overhead $10.00 per direct manufacturing labor-hourThe Sourdough Bread Company provides the following additional data for the year ended December 31, 2017:Required:Planned (budgeted) outputActual productionDirect manufacturing laborActual variable manufacturing overhead3,100,000 baguettes 2,600,000 baguettes 46,800 hours$617,7601. What is the denominator level used for allocating variable manufacturing overhead? (That is, for how many direct manufacturing labor-hours is Sourdough Bread budgeting?)2.…
⦁ Use ABC to compute overhead cost assigned to an order.KCC Production Corporation uses an activity-based costing system and provided the following budget data:
The distribution of resource consumption across activities is as follows:
During the year, KCC completed one order from a new customer for 1,000 units, and the related data are as follows:
direct labor hours= 0.5 /unit
direct materials= $2.00/unit
direct labor= $5.00/hour
machine hour =1 machine hour per unit
Requirements1. Compute the activity rates for each of the activity cost pools.2. Compute the overhead cost assigned to the order from the new customer.
Chapter 9 Solutions
Introduction To Managerial Accounting
Ch. 9.A - Fixed Overhead Variances Primara Corporation has a...Ch. 9.A - Predetermined Overhead Rate: Overhead Variances...Ch. 9.A - Applying Overhead in a Standard Costing System...Ch. 9.A - Prob. 4ECh. 9.A - Using Fixed Overhead Variances The standard cost...Ch. 9.A - Prob. 6ECh. 9.A - Relations Among Fixed Overhead Variances Selected...Ch. 9.A - Applying Overhead; Overhead Variances Lane Company...Ch. 9.A - Applying Overhead; Overhead Variances Chilczuk....Ch. 9.A - Comprehensive Standard Cost Variances "Wonderful!...
Ch. 9.A - Comprehensive Standard Cost Variances Flandro...Ch. 9.A - Selection of a Denominator: Overhead Analysis:...Ch. 9.B - Standard Cost Flows: Income Statement Preparation...Ch. 9.B - Standard Cost Flows: Income Statement Preparation...Ch. 9.B - Standard Cost Flows Bowen Company manufactures one...Ch. 9.B - Standard Cost Flows Hartwell Company manufactures...Ch. 9.B - Transaction Analysis; Income Statement Preparation...Ch. 9.B - Transaction Analysis; Income Statement Preparation...Ch. 9 - What is a static planning budget?Ch. 9 - What is a flexible budget and how does it differ...Ch. 9 - What are some of the possible reasons that actual...Ch. 9 - Why is it difficult to interpret a difference...Ch. 9 - What is a revenue variance and what does it mean?Ch. 9 - What is a spending variance and what does it mean?Ch. 9 - What does a flexible budget enable that a simple...Ch. 9 - How does a flexibe budget based on the cost...Ch. 9 - Prob. 9QCh. 9 - Why are separate price and quantity variances...Ch. 9 - Who is generally responsible for the materials...Ch. 9 - Prob. 12QCh. 9 - Prob. 13QCh. 9 - Our workers are all under labor contracts:...Ch. 9 - Prob. 15QCh. 9 - Prob. 16QCh. 9 - Prob. 17QCh. 9 - The Excel worksheet form that appears below is to...Ch. 9 - Prob. 2AECh. 9 - Preble Company manufactures one product. Its...Ch. 9 - Prob. 2F15Ch. 9 - Preble Company manufactures one product. Its...Ch. 9 - Prob. 4F15Ch. 9 - Prob. 5F15Ch. 9 - Prob. 6F15Ch. 9 - Preble Company manufactures one product. Its...Ch. 9 - Prob. 8F15Ch. 9 - Prob. 9F15Ch. 9 - Prob. 10F15Ch. 9 - Prob. 11F15Ch. 9 - Preble Company manufactures one product. Its...Ch. 9 - Prob. 13F15Ch. 9 - Preble Company manufactures one product. Its...Ch. 9 - Preble Company manufactures one product. Its...Ch. 9 - Prepare a Flexible Budget Puget Sound Divers is a...Ch. 9 - Prepare a Report Shong Revenue and Spending...Ch. 9 - Prepare a Flexible Budget with More Than One Cost...Ch. 9 - Direct Materials Variances Bandar Industries...Ch. 9 - Prob. 5ECh. 9 - Prob. 6ECh. 9 - Planning Budget Lavage Rapide is a Canadian...Ch. 9 - EXERCISE 98 Flexible Budget L091 Refer to the data...Ch. 9 - Prepare a Report Showing Revenue and Spending...Ch. 9 - Direct Labor and Variable Manufacturing Overhead...Ch. 9 - Prob. 11ECh. 9 - Working with More Than One Cost Driver The...Ch. 9 - Direct Materials and Direct Labor Variances Huron...Ch. 9 - Direct Materials Variances Refer to the data in...Ch. 9 - Prob. 15ECh. 9 - Prob. 16ECh. 9 - Prob. 17ECh. 9 - Comprehensive Variance Analysis Miller Toy Company...Ch. 9 - More than One Cost Driver Milano Pizza is a small...Ch. 9 - Basic Variance Analysis: the Impact of Vanances on...Ch. 9 - Multiple Products. Materials, and Processes...Ch. 9 - Variance Analysis In a Hospital John Fleming,...Ch. 9 - Flexible Budgets and Spending Variances You have...Ch. 9 - Comprehensive Variance Analysis Marvel Parts....Ch. 9 - Direct Materials and Direct Labor Variances:...Ch. 9 - Comprehensive Variance Analysis Highland Company...
Knowledge Booster
Learn more about
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
- Delano Company uses two types of direct labor for the manufacturing of its products: fabricating and assembly. Delano has developed the following standard mix for direct labor, where output is measured in number of circuit boards. During the second week in April, Delano produced the following results: Required: 1. Calculate the yield ratio. 2. Calculate the standard cost per unit of the yield. 3. Calculate the direct labor yield variance. 4. Calculate the direct labor mix variance.arrow_forwardRequired information [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct materials: 4 pounds at $10 per pound Direct labor: 2 hours at $16 per hour $ 40 32 Variable overhead: 2 hours at $6 per hour 12 Total standard cost per unit $ 84 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,500 units and incurred the following costs: a. Purchased 150,000 pounds of raw materials at a cost of $9.20 per pound. All of this material was used in production. b. Direct laborers worked 62,000 hours at a rate of $17 per hour. c. Total variable manufacturing overhead for the month was $390,600. 10. What is the labor efficiency variance for March? (Indicate the effect of each variance by selecting "F" for…arrow_forwardStar Company produces a single product. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. The standard cost card for one unit of product is as follows: Inputs (1) Standard Quantity or Hours (2) Standard Price or Rate Standard Cost (1 x2) Direct Material 8 grams $3 per gram $24 Direct Labor 0.50 hours $12 per hour 6 Variable Manufacturing Overheads 0.50 hours $10 per hour 5 $35 The planning budget for June was based on producing and selling 8,000 units. However, during June the company actually produced and sold 10,000 units and incurred the following costs: A. Purchased 85,000 grams of raw materials at a cost of $3.50 per gram. All of this material was used in production. B. Direct laborers worked 4,500 hours at a rate of $14.00 per hour. C. Total variable manufacturing overhead for the month was $50,000. Requirement a) What is the materials price variance for June? b) If Star Company had purchased 120,000 grams of materials at $3.50 per gram…arrow_forward
- Nevada Corporation makes a product with the following standard costs: Standard Price or Rate Standard Quantity or Hours 6.4 ounces $ 0.4 hours S 0.4 hours $ 3.00 per ounce 13.00 per hour 5.00 per hour The company reported the following results concerning this product in March. Direct materials Direct labor Variable overhead. Originally budgeted output Actual output Raw materials used in production Actual direct labor-hours Purchases of raw materials Actual price of raw materials Actual direct labor rate Actual variable overhead rate $ S $ O $3,277 F O $3,390 U O $3,390 F O $3,277 U Standard Cost Per Unit S S S 4,800 units 4,900 units 30,230 ounces 1,910 hours 32,600 ounces 2.90 per ounce 12.40 per hour 4.90 per hour 19.20 5.20 2.00 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for March is:arrow_forwardRequired information [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct materials: 4 pounds at $10 per pound Direct labor: 2 hours at $16 per hour Variable overhead: 2 hours at $6 per hour $ 40 32 12 Total standard cost per unit $ 84 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,500 units and incurred the following costs: a. Purchased 150,000 pounds of raw materials at a cost of $9.20 per pound. All of this material was used in production. b. Direct laborers worked 62,000 hours at a rate of $17 per hour. c. Total variable manufacturing overhead for the month was $390,600. 2. What raw materials cost would be included in the company's flexible budget for March? Raw material costarrow_forwardRequired INformation [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct materials: 4 pounds at $10 per pound Direct labor: 2 hours at $16 per hour Variable overhead: 2 hours at $6 per hour $ 40 32 12 Total standard cost per unit $ 84 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,500 units and incurred the following costs: a. Purchased 150,000 pounds of raw materials at a cost of $9.20 per pound. All of this material was used in production. b. Direct laborers worked 62,000 hours at a rate of $17 per hour. c. Total variable manufacturing overhead for the month was $390,600. 4. What is the materials quantity variance for March? (Indicate the effect of each variance by selecting "F" for…arrow_forward
- Required information [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct materials: 4 pounds at $10 per pound Direct labor: 2 hours at $16 per hour Variable overhead: 2 hours at $6 per hour $ 40 32 12 Total standard cost per unit $ 84 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,500 units and incurred the following costs: a. Purchased 150,000 pounds of raw materials at a cost of $9.20 per pound. All of this material was used in production. b. Direct laborers worked 62,000 hours at a rate of $17 per hour. c. Total variable manufacturing overhead for the month was $390,600. 11. What is the labor spending variance for March? (Indicate the effect of each variance by selecting "F" for…arrow_forwardA manufacturer of industrial equipment has a standard costing system based on standard direct labor-hours (DLHS) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: Level of activity Overhead costs at the denominator activity level: Variable overhead cost 2,950 DLHS $ 9,400 $39,125 Fixed overhead cost 17 The following data pertain to operations for the most recent period: Actual hours Standard hours allowed for the actual output Actual total variable manufacturing overhead cost Actual total fixed manufacturing overhead cost 3,500 DLHS 2,637 DLHS $10,000 $39,525 What is the predetermined overhead rate to the nearest cent?arrow_forwardAngle Max Industries produces a product which goes through two operations, Assembly and Finishing, before it is ready to be shipped. Next year's expected costs and activities are shown below. Direct labor hours Machine hours Overhead costs Multiple Choice Assume that the Assembly Department allocates overhead using a plantwide overhead rate based on machine hours. How much total overhead will be assigned to a product that requires 2 direct labor hour and 3.30 machine hours in the Assembly Department, and 4.50 direct labor hours and 0.4 machine hours in the Finishing Department? O$17.60. Assembly 180,000 DLH 380,000 MH $380,000 $20.40. Finishing 148,000 DLH 91, 200 MH $562, 400arrow_forward
- Sub : Accounting Please answer all questions. Please type the solution. Thank You Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis Santiago Inc. processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 78,000 units of product were as follows: Line Item Description Standard Costs Actual Costs Direct materials 195,000 lbs. at $5.50 per lb. 193,100 lbs. at $5.40 per lb. Direct labor 19,500 hrs. at $16.80 per hr. 19,950 hrs. at $17.10 per hr. Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 20,350 direct labor hrs.: Factory overhead Variable cost, $2.90 $55,980 variable cost Factory overhead Fixed cost, $4.60 $93,610 fixed cost Each unit requires 0.25 hour of direct labor. Required: a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost…arrow_forwardRequired INformation [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct materials: 4 pounds at $10 per pound Direct labor: 2 hours at $16 per hour Variable overhead: 2 hours at $6 per hour $ 40 32 12 Total standard cost per unit $ 84 The planning budget for March was based on producing and selling 30,000 units. However, during March the company actually produced and sold 34,500 units and incurred the following costs: a. Purchased 150,000 pounds of raw materials at a cost of $9.20 per pound. All of this material was used in production. b. Direct laborers worked 62,000 hours at a rate of $17 per hour. c. Total variable manufacturing overhead for the month was $390,600. 6. If Preble had purchased 177,000 pounds of materials at $9.20 per pound and used 150,000 pounds in production, what…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 Standard Quantity and Cost 6 pounds @ $8 per pound 3 DLH @ $16 per DLH 3 DLH @ $13 per DLH (1) Prepare the standard cost card showing standard cost per unit. (2) Compute total budgeted cost for June production. (3) Compute total actual cost for June production. (4) Compute total cost variance for June. Actual Results 43,700 pounds @ $8.20 per pound 21,400 hours @ $16.60 per hour $ 287,500 7,200 unitsarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY