ACTG 2020 Lecture Notes - Lecture 9: Standard Cost Accounting, Capacity Utilization
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The following data were drawn from the records of StuartCorporation.
| Planned volume for year (staticbudget) | 4,100 | units | |||||
| Standard direct materials costper unit | 3.00 | pounds | @ | $ | 1.60 | per pound | |
| Standard direct labor cost perunit | 2.80 | hours | @ | $ | 4.50 | per hour | |
| Total expected fixed overheadcosts | $ | 15,580 | |||||
| Actual volume for the year(flexible budget) | 4,300 | units | |||||
| Actual direct materials cost perunit | 2.70 | pounds | @ | $ | 2.00 | per pound | |
| Actual direct labor cost perunit | 3.20 | hours | @ | $ | 4.20 | per hour | |
| Total actual fixed overheadcosts | $ | 11,880 | |||||
Required
Prepare a materials variance information table showing thestandard price, the actual price, the standard quantity, and theactual quantity.
Calculate the materials price and usage variances. Indicatewhether the variances are favorable (F) or unfavorable (U).
Prepare a labor variance information table showing the standardprice, the actual price, the standard hours, and the actualhours.
Calculate the labor price and usage variances. Indicate whetherthe variances are favorable (F) or unfavorable (U).
Calculate the predetermined overhead rate, assuming that Stuartuses the number of units as the allocation base.
Calculate the fixed cost spending variance. Indicate whether thevariance is favorable (F) or unfavorable (U).
Calculate the fixed cost volume variance. Indicate whether thevariance is favorable (F) or unfavorable (U).
Prepare a materials variance information table showing thestandard price, the actual price, the standard quantity, and theactual quantity. (Round "Standard price" and "Actual price" to 2decimal places.)
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Calculate the materials price and usage variances. Indicatewhether the variances are favorable (F) or unfavorable (U). (Select"None" if there is no effect (i.e., zero variance).)
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Prepare a labor variance information table showing the standardprice, the actual price, the standard hours, and the actual hours.(Round "Standard price" and "Actual price" to 2 decimalplaces.)
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Calculate the labor price and usage variances. Indicate whetherthe variances are favorable (F) or unfavorable (U). (Select "None"if there is no effect (i.e., zero variance).)
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Calculate the predetermined overhead rate, assuming that Stuartuses the number of units as the allocation base. Calculate thefixed cost spending variance and the fixed cost volume variance.Indicate whether the variance is favorable (F) or unfavorable (U).(Round "Predetermined overhead rate" answer to 2 decimal places.Select "None" if there is no effect (i.e., zero variance).)
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Problem 1:
Peaceful Corporation manufactures figurines based on thefollowing information.
| Standard costs | $20 | |
| Materials (4 ounces at $5) | $8 | |
| Direct labor (1 hour per unit) | $4 | |
| Variable overhead (based on direct labor hours) | ||
| Fixed overhead budget | $19,000 | |
| Actual results and costs | ||
| Materials purchased | ||
| Units | 9,000 | |
| Cost | $39,600 | |
| Materials used in production | ||
| Finished product units | 2,000 | |
| Raw material (ounces) | 8,200 | |
| Direct labor hours | 2,000 | |
| Direct labor cost | $20,000 | |
| Variable overhead costs | $5,980 | |
| Fixed overhead costs | $19,500 |
Required:
- Prepare a performance report for Peaceful using the following headings.
- Actual Production Costs
- Flexible Budget Costs
- Flexible Budget Variances
- Compute the following variances (show calculations).
- Materials usage variance
- Labor rate variance
- Labor efficiency variance
- Variable overhead spending variance
- Variable overhead efficiency variance
- Fixed overhead budget variance
- Give one possible explanation for each of the six variances computed in part b.
Problem 2:
The following is the current variable costing income statementfor Dolly Corporation.
| Sales (5,000 units) | $100,000 | |
| Variable expenses Cost of goods sold | $35,000 | |
| Selling (10% of sales) | $10,000 | $45,000 |
| Contribution margin | $55,000 | |
| Fixed expenses | ||
| Manufacturing overhead | $24,000 | |
| Administrative | $12,500 | $36,500 |
| Operating income | $18,500 |
Below is the following information on operations for DollyCorporation.
| Beginning inventory (units) | 0 |
| Units produced (units) | 6,000 |
| Manufacturing costs | |
| Direct labor (per unit) | $5.00 |
| Direct materials (per unit) | $2.30 |
| Variable overhead (per unit) | $2.40 |
Required:
Prepare an absorption costing income statement.
Problem 3:
The following information was compiled for two models of cellphones.
| 3G model | 4G model | Average | |
| Budgeted Contribution Margin | $80.00 | $120.00 | $95.25 |
| Budgeted Sales in Units | 28,000 | 18,000 | |
| Actual Sales in Units | 28,600 | 16,500 |
Required:
Calculate the sales mix variance. (Show your calculations.)
Cole manufactures coffee mugs that it sells to other companies for customizing with their own logos. Cole 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 60,100 coffee mugs perâ month:
Data Table
| Direct materials ( | 0.2 | lbs @ | $0.25 | per lb) | $0.05 | |||||||
| Direct labor | ( | 3 | minutes @ | $0.10 | per minute) | 0.30 | ||||||
| Manufacturing overhead: | ||||||||||||
| Variable | ( | 3 | minutes @ | $0.05 | per minute) | $0.15 | ||||||
| Fixed | ( | 3 | minutes @ | $0.14 | per minute) | 0.42 | 0.57 | |||||
| Total cost per coffee mug | $0.92 | |||||||||||
Actual cost and production information for Julyâ follow:
| a. | Actual production and sales were 62,800 coffee mugs. | ||||||||
| b. | Actual direct materials usage was 12,000 âlbs., at an actual price of$0.18 per lb. | ||||||||
| c. | Actual direct labor usage of 201,000 minutes at a total cost of$26,130. | ||||||||
| d. | Actual overhead cost was $40,800 Requirements
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