ch. 10 managerial accounting ever green solutions

8/17/2019 Ch. 10 Managerial Accounting Ever green solutions

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9/14/2014 Assignment Print View

http://ezto.mheducation.com/hm_accounting.tpx?todo=printview 1

Score: 60 out of 60 points (100%)

1. award:10 out of 10.00points

Barberry, Inc., manufactures a product called Fruta. The company uses a standard cost system and hasestablished the following standards for one unit of Fruta:

StandardQuantity

Standard Priceor Rate

StandardCost

Direct materials 1.5 pounds $ 5.60 per pound $ 8.40

Direct labor 0.7 hours $11.90 per hour 8.33

Variable manufacturing overhead 0.7 hours $ 2.80 per hour 1.96

$ 18.69

During June, the company recorded this activity related to production of Fruta:a.The company produced 4,100 units during June.b.A total of 9,380 pounds of material were purchased at a cost of $49,714.c. There was no beginning inventory of materials; however, at the end of the month, 2,000 pounds of

material remained in ending inventory.d.The company employs 10 persons to work on the production of Fruta. During June, they worked an

average of 237 hours at an average rate of $12.60 per hour.e.Variable manufacturing overhead is assigned to Fruta on the basis of direct labor-hours. Variable

manufacturing overhead costs during June totaled $6,162.

The company's management is anxious to determine the efficiency of Fruta production activities.

Required:

1. For direct materials:

a. Compute the price and quantity variances. (Input all amounts as positive values. Do not roundintermediate calculations. Leave no cells blank - be certain to enter "0" wherever required.Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and"None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Materials price variance $ 2,814 F Materials quantity variance $ 6,888 U

b. The materials were purchased from a new supplier who is anxious to enter into a long termpurchase contract. Would you recommend that the company sign the contract?

No

2. For labor employed in the production of Fruta:

a. Compute the rate and efficiency variances. (Input all amounts as positive values. Leave nocells blank - be certain to enter "0" wherever required. Indicate the effect of each varianceby selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zerovariance). Omit the "$" sign in your response.)

Labor rate variance $ 1,659 U Labor efficiency variance $ 5,950 F

b. In the past, the 10 persons employed in the production of Fruta consisted of 4 senior workers and


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6 assistants. During June, the company experimented with 5 senior workers and 5 assistants.Would you recommend that the new labor mix be continued?

Yes

3a. Compute the variable overhead rate and efficiency variances. (Input all amounts as positivevalues. Do not round intermediate calculations. Leave no cells blank - be certain to enter "0"wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Variable overhead rate variance $ 474 F Variable overhead efficiency variance $ 1,400 F

WorksheetLearning Objective: 10-02 Compute thedirect labor efficiency and rate variancesand explain their significance.

Learning Objective: 10-01 Compute thedirect materials quantity and pricevariances and explain their significance.

Learning Objective: 10-03 Compute thevariable manufacturing overheadefficiency and rate variances and explaintheir significance.

Barberry, Inc., manufactures a product called Fruta. The company uses a standard cost system and hasestablished the following standards for one unit of Fruta:

StandardQuantity


StandardCost

Direct materials 1.5 pounds $ 5.60 per pound $ 8.40

Direct labor 0.7 hours $11.90 per hour 8.33

Variable manufacturing overhead 0.7 hours $ 2.80 per hour 1.96

$ 18.69

During June, the company recorded this activity related to production of Fruta:a.The company produced 4,100 units during June.b.A total of 9,380 pounds of material were purchased at a cost of $49,714.c. There was no beginning inventory of materials; however, at the end of the month, 2,000 pounds of

material remained in ending inventory.d.The company employs 10 persons to work on the production of Fruta. During June, they worked an

average of 237 hours at an average rate of $12.60 per hour.e.Variable manufacturing overhead is assigned to Fruta on the basis of direct labor-hours. Variable

manufacturing overhead costs during June totaled $6,162.

The company's management is anxious to determine the efficiency of Fruta production activities.

Required:1. For direct materials:

a. Compute the price and quantity variances. (Input all amounts as positive values. Do not roundintermediate calculations. Leave no cells blank - be certain to enter "0" wherever required.Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and"None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Materials price variance $ 2,814 F

Materials quantity variance $ 6,888 U

b. The materials were purchased from a new supplier who is anxious to enter into a long termpurchase contract. Would you recommend that the company sign the contract?

No


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2. For labor employed in the production of Fruta:

a. Compute the rate and efficiency variances. (Input all amounts as positive values. Leave nocells blank - be certain to enter "0" wherever required. Indicate the effect of each varianceby selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zerovariance). Omit the "$" sign in your response.)

Labor rate variance $ 1,659 U

Labor efficiency variance $ 5,950 F

b. In the past, the 10 persons employed in the production of Fruta consisted of 4 senior workers and6 assistants. During June, the company experimented with 5 senior workers and 5 assistants.Would you recommend that the new labor mix be continued?

Yes

3a. Compute the variable overhead rate and efficiency variances. (Input all amounts as positivevalues. Do not round intermediate calculations. Leave no cells blank - be certain to enter "0"wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Variable overhead rate variance $ 474 F

Variable overhead efficiency variance $ 1,400 F

Explanation:

1.a.

In the solution below, the materials price variance is computed on the entire amount of materialspurchased, whereas the materials quantity variance is computed only on the amount of materials used inproduction:

Standard Quantity Allowedfor Actual Output,at Standard Price

Actual Quantity of

Input, atStandard Price

Actual Quantity

of Input,at Actual Price

(SQ × SP) (AQ × SP) (AQ × AP)

6,150 pounds* ×$5.60 per pound

7,380 pounds ×$5.60 per pound

= $34,440 = $41,328 $49,714

Materials quantity

variance = $6,888 U9,380 pounds ×$5.60 per pound

= $52,528

Materials price variance= $2,814 F

*4,100 units × 1.5 pounds per unit = 6,150 pounds

1.b.

No, the contract should probably not be signed. Although the new supplier is offering the material at only$5.30* per pound, the large materials quantity variance indicates a problem using these materials inproduction. The company still has 2,000 pounds of unused material in the warehouse; if these materialsdo as poorly in production as the 7,380 pounds already used, the total quantity variance on the 9,380pounds of materials purchased will be very large. *$49,714 ÷ 9,380 pounds = $5.30 per pound

2.a.


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2. award:

10 out of 10.00points

3. award:


Standard Hours Allowedfor Actual Output,at Standard Rate

Actual Hours

of Input,at Standard Rate

Actual Hours

of Input,at Actual Rate

(SH × SR) (AH × SR) (AH × AR)

2,870 hours* ×$11.90 per hour

2,370 hours** ×$11.90 per hour

2,370 hours** ×$12.60 per hour

= $34,153 = $28,203 = $29,862

Labor efficiency variance= $5,950 F

Labor rate variance= $1,659 U

Spending variance = $4,291 F *4,100 units × .70 hours per unit = 2,870 hours

**10 workers × 237.00 hours per worker = 2,370 hours

2.b.

Yes, the new labor mix should probably be continued. Although it increases the average hourly labor costfrom $11.90 to $12.60, resulting in an $1,659 unfavorable labor rate variance, this is more than offset bygreater efficiency of labor time. Notice that the labor efficiency variance is $5,950 favorable. Thus, thenew labor mix reduces overall labor costs.

3a.

Standard Hours Allowed

for Actual Output,at Standard Rate

Actual Hours

of Input,at Standard Rate

Actual Hours

of Input,at Actual Rate


2,870 hours ×$2.80 per hour


= $8,036 = $6,636 $6,162

Variable overheadefficiency variance

= $1,400 F

Variable overheadrate variance

= $474 F

Spending variance = $1,874 F

Full credit for this question has been awarded to allstudents

Vitalite, Inc., produces a number of products, including a body-wrap kit. Standard variable costs relatingto a single kit are given below:

Standard Quantityor Hours


StandardCost

Direct materials ? $4 per yard $ ?Direct labor ? ? ?


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Variable manufacturing overhead ? $2 per directlabor-hour

?

Total standard cost per kit $47

During August, 400 kits were manufactured and sold. Selected information relating to the month’sproduction is given below:

Materials Used Direct Labor

VariableManufacturing

Overhead Total standard cost* ? $5,400 $1,800 Actual costs incurred $8,000 ? $1,820 Materials price variance ?Materials quantity variance $ 4,400 ULabor rate variance ?Labor efficiency variance ?Variable overhead rate variance ?

Variable overhead efficiency variance ?

*For the month's production. The following additional information is available for August’s production of kits:

Actual direct labor-hours 1,000Difference between standard and actual cost per kit produced during August $.17 U

Required:1. What was the total standard cost of the materials used during August? (Omit the "$" sign in your

response.)

Standard cost $ 11,600

2. How many yards of material are required at standard per kit? (Do not round intermediatecalculations. Round your final answer to 2 decimal places.)

Number of yards 7.25 yards per kit

3. What was the materials price variance for August if there were no beginning or ending inventories of materials? (Input all amounts as positive values. Do not round intermediate calculations. Leaveno cells blank - be certain to enter "0" wherever required. Indicate the effect of each varianceby selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zerovariance). Omit the "$" sign in your response.)

Material price variance $ 8,000 F

4. What is the standard direct labor rate per hour? (Omit the "$" sign in your response.)

Standard direct labor rate $ 6 per DLH 5. What was the labor rate variance for August? The labor efficiency variance? (Input all amounts as

positive values. Do not round intermediate calculations. Leave no cells blank - be certain toenter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable,

"U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Labor rate variance $ 3,048 U Labor efficiency variance $ 600 U

6. What was the variable overhead rate variance for August? The variable overhead efficiency variance?(Input all amounts as positive values. Do not round intermediate calculations. Leave no cellsblank - be certain to enter "0" wherever required. Indicate the effect of each variance byselecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).Omit the "$" sign in your response.)

Variable overhead rate variance $ 180 F Variable overhead efficiency

$ 200 U


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variance 7. Complete the standard cost card for one kit shown at the beginning of the problem. (Do not round

intermediate calculations. Round your answers to 2 decimal places. Omit the "$" sign in your response.)

Standard Quantity

or Hours Standard Price or Rate Standard Cost Direct materials 7.25 yards $4 per yard $ 29.00 Direct labor 2.25 hours $ 6.00 per hour 13.50 Variable manufacturing overhead 2.25 hours $2 per direct labor-hour 4.50


rev: 04_27_2012




Vitalite, Inc., produces a number of products, including a body-wrap kit. Standard variable costs relatingto a single kit are given below:

Standard Quantityor Hours


StandardCost

Direct materials ? $4 per yard $ ?Direct labor ? ? ?Variable manufacturing overhead ? $2 per direct

labor-hour ?


During August, 400 kits were manufactured and sold. Selected information relating to the month’sproduction is given below:

Materials Used Direct Labor

VariableManufacturing

Overhead Total standard cost* ? $5,400 $1,800 Actual costs incurred $8,000 ? $1,820 Materials price variance ?Materials quantity variance $ 4,400 ULabor rate variance ?Labor efficiency variance ?Variable overhead rate variance ?

Variable overhead efficiency variance ?

*For the month's production. The following additional information is available for August’s production of kits:

Actual direct labor-hours 1,000Difference between standard and actual cost per kit produced during August $.17 U

Required:1. What was the total standard cost of the materials used during August? (Omit the "$" sign in your

response.)

Standard cost $ 11,600


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2. How many yards of material are required at standard per kit? (Do not round intermediatecalculations. Round your final answer to 2 decimal places.)

Number of yards 7.25 yards per kit

3. What was the materials price variance for August if there were no beginning or ending inventories of materials? (Input all amounts as positive values. Do not round intermediate calculations. Leaveno cells blank - be certain to enter "0" wherever required. Indicate the effect of each varianceby selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zerovariance). Omit the "$" sign in your response.)

Material price variance $ 8,000 F 4. What is the standard direct labor rate per hour? (Omit the "$" sign in your response.)

Standard direct labor rate $ 6 per DLH 5. What was the labor rate variance for August? The labor efficiency variance? (Input all amounts as

positive values. Do not round intermediate calculations. Leave no cells blank - be certain toenter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable,"U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Labor rate variance $ 3,048 U

Labor efficiency variance $ 600 U

6. What was the variable overhead rate variance for August? The variable overhead efficiency variance?

(Input all amounts as positive values. Do not round intermediate calculations. Leave no cellsblank - be certain to enter "0" wherever required. Indicate the effect of each variance byselecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).Omit the "$" sign in your response.)

Variable overhead rate variance $ 180 F

Variable overhead efficiencyvariance

$ 200 U

7. Complete the standard cost card for one kit shown at the beginning of the problem. (Do not round

intermediate calculations. Round your answers to 2 decimal places. Omit the "$" sign in your response.)

Standard Quantityor Hours Standard Price or Rate Standard Cost

Direct materials 7.25 yards $4 per yard $ 29.00

Direct labor 2.25 hours $ 6.00 per hour 13.50

Variable manufacturing overhead 2.25 hours $2 per direct labor-hour 4.50


rev: 04_27_2012

Explanation:

1. Total standard cost for units produced during August:400 kits × $47 per kit $18,800

Less standard cost of labor and overhead:Direct labor (5,400)

Variable manufacturing overhead (1,800) Standard cost of materials used during August $11,600

2.

Standard cost of materials used during August (a) $11,600


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Number of units produced (b) 400

Standard materials cost per kit (a) ÷ (b) $ 29.00

Standard materials cost per kit =

$29.00 per kit = 7.25 yards per kit

Standard materials cost per yard $4 per yard 3.

Standard Quantity

Allowedfor Actual Output,at Standard Price

Actual Quantity of

Input, atStandard Price

Actual Quantity of

Input, at Actual Price


2,900 yards** ×$4 per yard*

4,000 yards ×$4 per yard*

4,000 yards ×$2 per yard

= $11,600 = $16,000 = $8,000*

Materials quantityvariance = $4,400 U*

Materials pricevariance = $8,000 F

Spending variance = $3,600 F * Given** 400 kits × 7.25 yards per kit = 2,900 yards

4.

The first step in computing the standard direct labor rate is to determine the standard direct labor-hoursallowed for the month’s production. The standard direct labor-hours can be computed by working with thevariable manufacturing overhead cost figures because they are based on direct labor-hours worked:

Standard variable manufacturing overhead cost for August (a) $ 1,800Standard manufacturing variable overhead rate per direct labor-hour (b) $ 2

Standard direct labor-hours for the month (a) ÷ (b) 900

Total standard direct labor cost for the month =

$5,400

Total standard direct labor-hours for the month 900 DLHs = $6 per DLH 5.

Before the labor variances can be computed, the actual direct labor cost for the month must becomputed:

Actual cost per kit produced ($47.00 + $.17) $ 47.17Number of kits produced × 400

Total actual cost of production $18,868Less: Actual cost of materials $8,000

Actual cost of manufacturing variable overhead 1,820 9,820

Actual cost of direct labor $ 9,048

With this information, the variances can be computed: Standard Hours Allowed


Actual Hours of Input,at Standard Rate

Actual Hours of Input,at Actual Rate


1,000 hours* ×$6 per hour

$5,400* = $6,000 $9,048


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4.

award:


Labor efficiency variance= $600 U

Labor rate variance= $3,048 U

Spending variance = $3,648 U* Given 6. Standard Hours Allowed


Actual Hours of Input,at Standard Rate



1,000 hours* ×$2 per hour*

$1,800* = $2,000 $1,820*Variable overheadefficiency variance

= $200 U

Variable overheadrate variance

= $180 FSpending variance = $20 U

* Given 7.

900 hours ÷ 400 kits = 2.25 hours per kit.

Helix Company produces several products in its factory, including a karate robe. The company uses astandard cost system to assist in the control of costs. According to the standards that have been set for the robes, the factory should work 780 direct labor-hours each month and produce 3,900 robes. Thestandard costs associated with this level of production are as follows:

TotalPer Unit

of Product Direct materials $88,920 $ 22.80Direct labor $11,700 3.00Variable manufacturing overhead

(based on direct labor-hours) $ 2,340 0.60

$ 26.40

During April, the factory worked only 750 direct labor-hours and produced 4,000 robes. The followingactual costs were recorded during the month:

TotalPer Unit

of Product Direct materials (12,400 yards) $ 86,800 $ 21.70Direct labor $12,800 3.20

Variable manufacturing overhead $ 6,000 1.50

$ 26.40

At standard, each robe should require 3.0 yards of material. All of the materials purchased during themonth were used in production.

Required:1. Compute the materials price and quantity variances for April: (Input all amounts as positive values.

Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of eachvariance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zerovariance). Round your intermediate calculations to 2 decimal places and final answers to thenearest whole dollar. Omit the "$" sign in your response.)

Materials price variance $ 7,440 F Materials quantity variance $ 3,040 U


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2. Compute the labor rate and efficiency variances for April: (Input all amounts as positive values.Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of eachvariance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zerovariance). Do not round intermediate calculations. Round your final answers to the nearestdollar amount. Omit the "$" sign in your response.)

Labor rate variance $ 1,553 U Labor efficiency variance $ 750 F

3. Compute the variable manufacturing overhead rate and efficiency variances for April: (Input allamounts as positive values. Leave no cells blank - be certain to enter "0" wherever required.Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and"None" for no effect (i.e., zero variance). Round your intermediate calculations to 2 decimalplaces and final answers to the nearest whole dollar. Omit the "$" sign in your response.)

Variable overhead rate variance $ 3,750 U Variable overhead efficiency

variance$ 150 F

rev: 04_17_2013_QC_28907

Worksheet

Learning Objective: 10-02 Compute the

direct labor efficiency and rate variancesand explain their significance.



Helix Company produces several products in its factory, including a karate robe. The company uses astandard cost system to assist in the control of costs. According to the standards that have been set for the robes, the factory should work 780 direct labor-hours each month and produce 3,900 robes. Thestandard costs associated with this level of production are as follows:

Total

Per Unit

of Product Direct materials $88,920 $ 22.80Direct labor $11,700 3.00Variable manufacturing overhead

(based on direct labor-hours) $ 2,340 0.60

$ 26.40

During April, the factory worked only 750 direct labor-hours and produced 4,000 robes. The followingactual costs were recorded during the month:

TotalPer Unit

of Product

Direct materials (12,400 yards) $ 86,800 $ 21.70Direct labor $12,800 3.20Variable manufacturing overhead $ 6,000 1.50

$ 26.40

At standard, each robe should require 3.0 yards of material. All of the materials purchased during themonth were used in production.

Required:1. Compute the materials price and quantity variances for April: (Input all amounts as positive values.

Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of eachvariance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zerovariance). Round your intermediate calculations to 2 decimal places and final answers to the


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5. award:10 out of 10.00points

*780 standard hours ÷ 3,900 robes = 0.2 standard hour per robe $3.00 standard cost per robe ÷ 0.2standard hours = $15.00 standard rate per hour **4,000 robes × .2 standard hour per robe = 800 standard hours 3.



Actual Hours of Input, at the

Standard Rate

Actual Hoursof Input,

at Actual Rate


800 hours ×$3.00 per hour* 750 hours ×$3.00 per hour*= $2,400 = $2,250 $6,000


= $150 F

Variable overheadrate variance= $3,750 U

Spending variance = $3,600 U *$.60 standard cost per robe ÷ .20 standard hours = $3.00 standard rate per hour

You have recently accepted a position with Lorthen Inc. As part of your duties, you review the variancesthat are reported for each period and make a presentation to the company's executive committee. Earlier this morning you received the variances for one of the company's major products for the mostrecent period. After reviewing the variances and organizing the data for your presentation, youaccidentally placed the material on top of some papers that were going to the shredder. In the middle of lunch you suddenly realized your mistake and dashed to the shredding room. There you found theoperator busily feeding your pages through the machine. You managed to pull only part of one page fromthe feeding chute, which contains the following information:

Standard Cost Card Direct materials, 2.30 meters at $17.10 per meter $ 39.33

Direct labor, 1.00 hours at $16.10 per hour $ 16.10Variable overhead, 1.00 hours at $9.30 per hour $ 9.30

Total StandardCost

Quantity or Efficiency Variance

Price or RateVariance

Direct materials $ 589,950 $34,200 U $ 10,585 FDirect labor $ 241,500 $16,100 U $ 3,200 UVariable overhead $ 139,500 Ruined by shredder $ 4,000 F

The standard for variable overhead is based on direct labor-hours. All of the materials purchased duringthe period were used in production. At lunch your supervisor said how pleased she was with your work and that she was looking forwardto your presentation that afternoon. You realize that to avoid looking like a bungling fool you mustsomehow generate the necessary "backup" data for the variances before the executive committee

meeting starts in one hour.

Required:1. How many units were produced during the period?

Number of units produced 15,000

2. How many meters of direct materials were purchased and used in production?

Number of meters purchased 36,500

3. What was the actual cost per meter of material? (Round your answer to 2 decimal places. Omitthe "$" sign in your response.)

Actual cost per meter $ 16.81


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4. How many actual direct labor-hours were worked during the period?

Actual direct labor-hours 16,000

5. What was the actual rate per direct labor-hour? (Round your answer to 2 decimal places. Omit the"$" sign in your response.)

Actual rate per direct labor-hour $ 16.30

6. How much actual variable manufacturing overhead cost was incurred during the period? (Omit the"$" sign in your response.)

Actual variable manufacturing overhead cost $ 144,800




You have recently accepted a position with Lorthen Inc. As part of your duties, you review the variancesthat are reported for each period and make a presentation to the company's executive committee. Earlier this morning you received the variances for one of the company's major products for the mostrecent period. After reviewing the variances and organizing the data for your presentation, youaccidentally placed the material on top of some papers that were going to the shredder. In the middle of lunch you suddenly realized your mistake and dashed to the shredding room. There you found theoperator busily feeding your pages through the machine. You managed to pull only part of one page fromthe feeding chute, which contains the following information:

Standard Cost Card Direct materials, 2.30 meters at $17.10 per meter $ 39.33Direct labor, 1.00 hours at $16.10 per hour $ 16.10Variable overhead, 1.00 hours at $9.30 per hour $ 9.30

Total StandardCost

Quantity or Efficiency Variance

Price or RateVariance

Direct materials $ 589,950 $34,200 U $ 10,585 FDirect labor $ 241,500 $16,100 U $ 3,200 UVariable overhead $ 139,500 Ruined by shredder $ 4,000 F

The standard for variable overhead is based on direct labor-hours. All of the materials purchased duringthe period were used in production. At lunch your supervisor said how pleased she was with your work and that she was looking forwardto your presentation that afternoon. You realize that to avoid looking like a bungling fool you mustsomehow generate the necessary "backup" data for the variances before the executive committeemeeting starts in one hour.

Required:

1. How many units were produced during the period?

Number of units produced 15,000

2. How many meters of direct materials were purchased and used in production?

Number of meters purchased 36,500

3. What was the actual cost per meter of material? (Round your answer to 2 decimal places. Omitthe "$" sign in your response.)

Actual cost per meter $ 16.81

4. How many actual direct labor-hours were worked during the period?


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Actual direct labor-hours 16,000

5. What was the actual rate per direct labor-hour? (Round your answer to 2 decimal places. Omit the"$" sign in your response.)

Actual rate per direct labor-hour $ 16.30

6. How much actual variable manufacturing overhead cost was incurred during the period? (Omit the"$" sign in your response.)

Actual variable manufacturing overhead cost $ 144,800

Explanation:

1.

The number of units produced can be computed by using the total standard cost applied for the periodfor any input—materials, labor, or variable overhead. Using the standard cost applied for materials, wehave:

Total standard cost applied=

$589,950 = 15,000 units

Standard cost per unit $39.33 per unit

The same answer can be obtained by using any other cost input.

2 & 3.Direct materials analysis:

Standard Quantity Allowedfor Actual Output,at Standard Price

Actual Quantity of

Input,at Standard Price

Actual Quantity of

Input,at Actual Price


34,500 meters* ×$17.10 per meter

36,500 meters** ×$17.10 per meter

36,500 meters ×

$16.81 per meter***= $589,950 = $624,150 = $613,565

Materials quantity variance

= $34,200 UMaterials price variance

= $10,585 F

*15,000 units × 2.30 meters per unit = 34,500 meters**$624,150 ÷ $17.10 per meter = 36,500 meters***$613,565 ÷ 36,500 meters = $16.81 per meter

4 & 5.

Direct labor analysis:


Actual Hours of

Input,at Standard Rate

Actual Hours of

Input,at Actual Rate


15,000 hours* ×$16.10 per hour

16,000 hours** ×$16.10 per hour

16,000 hours ×

$16.30 per hour***= $241,500 = $257,600 = $260,800

Labor efficiency variance= $16,100 U Labor rate variance= $3,200 U

*15,000 units × 1.00 hours per unit = 15,000 hours**$257,600 ÷ $16.10 per hour = 16,000 hours***$260,800 ÷ 16,000 hours = $16.30 per hour

6.

Variable overhead analysis:


Actual Hours of Input,

at Standard Rate

Actual Hours of Input,

at Actual Rate



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6. award:




= $139,500 = $148,800 = $144,800*


= $9,300 U

Variable overhead ratevariance

= $4,000 F

*$148,800 – $4,000 = $144,800

Wymont Company produces a single product that requires a large amount of labor time. Overhead costis applied on the basis of standard direct labor-hours. Variable manufacturing overhead should be $7 per standard direct labor-hour and fixed manufacturing overhead should be $111,000 per year. The company’s product requires 5 feet of direct material that has a standard cost of $3.5 per foot. Theproduct requires 1.4 hours of direct labor time. The standard labor rate is $15 per hour. During the year, the company had planned to operate at a denominator activity level of 22,200 directlabor-hours and to produce 22,500 units of product. Actual activity and costs for the year were as follows:

Number of units produced 24,500 Actual direct labor-hours worked 34,000 Actual variable manufacturing overhead cost incurred $ 67,000 Actual fixed manufacturing overhead cost incurred $ 329,600

Required:1. Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed

components. (Omit the "$" sign in your response.)

Predetermined overhead rate $ 12 per DLHVariable rate $ 7 per DLHFixed rate $ 5 per DLH

2. Complete the standard cost card for the company’s product; show the details for all manufacturingcosts on your standard cost card. (Round your answers to 2 decimal places. Omit the "$" sign inyour response.)

Direct materials, 5.00 feet at $ 3.50 per foot $ 17.50 Direct labor, 1.40 DLHs at $ 15.00 per DLH 21.00 Variable overhead, 1.40 DLHs at $ 7.00 per DLH 9.80 Fixed overhead, 1.40 DLHs at $ 5.00 per DLH 7.00

Standard cost per unit $ 55.30

3a. Compute the standard direct labor-hours allowed for the year’s production.

Standard direct labor hours 34,300

3b. Complete the following Manufacturing Overhead T-account for the year (Input all amounts aspositive values. Omit the "$" sign in your response):

Manufacturing Overhead

Actual costs 396,600 Applied costs 411,600

Overapplied overhead 15,000

4. Determine the reason for the underapplied or overapplied overhead from (3) above by computing thevariable overhead rate and efficiency variances and the fixed overhead budget and volume variances.


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(Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Variable overhead rate variance $ 171,000 F Variable overhead efficiency variance $ 2,100 F Fixed overhead budget variance $ 218,600 U Fixed overhead volume variance $ 60,500 F

Worksheet

Learning Objective: 10A-03 Compute thevariable manufacturing overheadefficiency and rate variances and explaintheir significance.

Learning Objective: 10A-04 (Appendix10A) Compute and interpret the fixedoverhead volume and budget variances.

Wymont Company produces a single product that requires a large amount of labor time. Overhead costis applied on the basis of standard direct labor-hours. Variable manufacturing overhead should be $7 per standard direct labor-hour and fixed manufacturing overhead should be $111,000 per year. The company’s product requires 5 feet of direct material that has a standard cost of $3.5 per foot. Theproduct requires 1.4 hours of direct labor time. The standard labor rate is $15 per hour. During the year, the company had planned to operate at a denominator activity level of 22,200 directlabor-hours and to produce 22,500 units of product. Actual activity and costs for the year were as follows:

Number of units produced 24,500 Actual direct labor-hours worked 34,000 Actual variable manufacturing overhead cost incurred $ 67,000 Actual fixed manufacturing overhead cost incurred $ 329,600

Required:1. Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed

components. (Omit the "$" sign in your response.)

Predetermined overhead rate $ 12 per DLH

Variable rate $ 7 per DLH

Fixed rate $ 5 per DLH

2. Complete the standard cost card for the company’s product; show the details for all manufacturingcosts on your standard cost card. (Round your answers to 2 decimal places. Omit the "$" sign inyour response.)

Direct materials, 5.00 feet at $ 3.50 per foot $ 17.50

Direct labor, 1.40 DLHs at $ 15.00 per DLH 21.00

Variable overhead, 1.40 DLHs at $ 7.00 per DLH 9.80

Fixed overhead, 1.40 DLHs at $ 5.00 per DLH 7.00

Standard cost per unit $ 55.30

3a. Compute the standard direct labor-hours allowed for the year’s production.

Standard direct labor hours 34,300

3b. Complete the following Manufacturing Overhead T-account for the year (Input all amounts aspositive values. Omit the "$" sign in your response):

Manufacturing Overhead

Actual costs 396,600 Applied costs 411,600

Overapplied overhead 15,000


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4. Determine the reason for the underapplied or overapplied overhead from (3) above by computing thevariable overhead rate and efficiency variances and the fixed overhead budget and volume variances.(Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Variable overhead rate variance $ 171,000 F

Variable overhead efficiency variance $ 2,100 F

Fixed overhead budget variance $ 218,600 U

Fixed overhead volume variance $ 60,500 F

Explanation:

1.

Total:$ 266,400

= $12 per DLH22,200 DLHs

Variable:$ 155,400


Fixed:$ 111,000


3a.

24,500 units × 1.4 DLHs per unit = 34,300 standard DLHs.

3b.

Applied costs (34,300 standard DLHs × $12.00 per DLH) = 411,600

4.

Variable overhead variances:



(SH × SR)

Actual Hours of Input,at the Standard Rate

(AH × SR)


(AH × AR)

34,300 DLHs ×

$7 per DLH= $240,100

34,000 DLHs ×$7 per DLH= $238,000 $67,000


= $2,100 F

Variable overheadrate variance= $171,000 F

Fixed overhead variances:

Fixed Overhead Applied to Work in

Process

Budgeted FixedOverhead

Actual FixedOverhead

34,300 DLHs ×

$5 per DLH= $171,500 $111,000 $329,600

Volume variance

= $60,500 FBudget variance

= $218,600 U

Summary of variances:

Variable overhead efficiency variance $ 2,100 F Variable overhead rate variance 171,000 F Fixed overhead volume variance 60,500 F Fixed overhead budget variance 218,600 U


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Overapplied overhead—see part 3 $ 15,000 F

ch. 10 managerial accounting ever green solutions

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