ACTG 2020 Lecture Notes - Lecture 1: Standard Cost Accounting, International Labor Standards, Minivan
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Diamond Company produces a single product. The company has set thefollowing standards for materials and labor: |
Standard quantity or hours per unit | Standard price or rate | |
Direct materials | ? pounds per unit | $? per pound |
Direct labor | 3.0 hours per unit | $11 per hour |
During the past month, the company purchased 8,200 pounds of directmaterials at a cost of $16,810. All of this material was used inthe production of 1,500 units of product. Direct labor cost totaled$51,920 for the month. The following variances have beencomputed: |
Materials quantity variance | $ | 1,645 | U |
Total materials variance | $ | 815 | F |
Labor efficiency variance | $ | 1,100 | F |
Required: | |
1. | For direct materials: |
a. | Compute the standard price per pound of materials. (Round yourintermediate calculations and final answer to 2 decimal places.Omit the "$" sign in your response.) |
Standard price | $ per pound |
b. | Compute the standard quantity allowed for materials for the month'sproduction. (Round yourintermediate calculations to 2 decimal places.) |
Standard quantity | pounds |
c. | Compute the standard quantity of materials allowed per unit ofproduct. (Round yourintermediate calculations to 2 decimal places.) |
Standard quantity | pounds per unit |
2. | For direct labor: |
a. | Compute the actual direct labor hours for the month. |
Actual direct labor hours |
b. | Compute the labor rate variance. (Input the amount as apositive value. Leave no cells blank - be certain to enter "0"wherever required. Indicate the effect of each variance byselecting "F" for favorable, "U" for unfavorable, and "None" for noeffect (i.e., zero variance). Round yourintermediate calculations to 2 decimal places. Omit the "$" sign inyour response.) |
Labor rate variance | $ | (Click to select)FUNone |
Helix Company produces several products in its factory,including a karate robe. The company uses a standard cost system toassist in the control of costs. According to the standards thathave been set for the robes, the factory should work 780 directlabor-hours each month and produce 2,600 robes. The standard costsassociated with this level of production are as follows: |
Total | Per Unit of Product | ||
Directmaterials | $ | 53,248 | $ 20.48 |
Direct labor | $ | 8,580 | 3.30 |
Variable manufacturing overhead | $ | 3,120 | 1.20 |
$ 24.98 | |||
During April, the factory worked only755 direct labor-hours and produced 2,700 robes. The followingactual costs were recorded during the month: |
Total | Per Unit of Product | ||
Direct materials(9,180 yards) | $ | 55,080 | $ 20.40 |
Direct labor | $ | 9,450 | 3.50 |
Variable manufacturing overhead | $ | 4,860 | 1.80 |
$ 25.70 | |||
At standard, each robe should require 3.2 yards of material. Allof the materials purchased during the month were used inproduction. |
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 ofeach variance by selecting "F" for favorable, "U" for unfavorable,and "None" for no effect (i.e., zero variance). Round yourintermediate calculations to 2 decimal places and final answers tothe nearest dollar amount.) |
Materials pricevariance | $ | (Click toselect)FUNone |
Materials quantityvariance | $ | (Click toselect)NoneFU |
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 ofeach variance by selecting "F" for favorable, "U" for unfavorable,and "None" for no effect (i.e., zero variance). Do not round yourintermediate calculations. Round your final answers to the nearestdollar.) |
Labor ratevariance | $ | (Click toselect)FNoneU |
Labor efficiencyvariance | $ | (Click toselect)FNoneU |
3. | Compute the variable manufacturing overhead rate and efficiencyvariances for April: (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" forfavorable, "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 dollaramount.) |
Variable overheadrate variance | $ | (Click toselect)NoneFU |
Variable overheadefficiency variance | $ | (Click toselect)NoneUF |