HR 2202 Study Guide - Final Guide: White Chocolate, Zippie, Kilogram
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| P11-2A Computevariances, and prepare income statement | ||||||||||||
| Ayala Corporation accumulatesthe following data relative to jobs started and finished during themonth of June 2017. | ||||||||||||
| Cost and Production Data | Actual | Standard | ||||||||||
| Raw materials unit cost | $2.30 | $2.10 | ||||||||||
| Raw materials units used | 11,000 | 10,000 | ||||||||||
| Direct labor payroll | $120,960 | $120,000 | ||||||||||
| Direct labor hours worked | 14,400 | 15,000 | ||||||||||
| Manufacturing overheadincurred | $189,500 | |||||||||||
| Manufacturing overheadapplied | $189,000 | |||||||||||
| Machine hours expected to beused at normal capacity | 42,500 | |||||||||||
| Budgeted fixed overhead forJune | $55,250 | |||||||||||
| Variable overhead rate permachine hour | $3.00 | |||||||||||
| Fixed overhead rate permachine hour | $1.30 | |||||||||||
| Overhead is applied on thebasis of standard machine hours. Three hours of machine timeare | ||||||||||||
| required for each directlabor hour. The jobs were sold for $400,000. Selling andadministrative | ||||||||||||
| expenses were $40,000. Assumethat the amount of raw materials purchased equaled the amount | ||||||||||||
| used. | ||||||||||||
| Instructions | ||||||||||||
| (a) Compute all of thevariances for (1) direct materials and (2) direct labor. | ||||||||||||
| (b) Compute the total overheadvariance. | ||||||||||||
| (c) Prepare an incomestatement for management. (Ignore income taxes.) | ||||||||||||
| NOTE: Enter a number in cellsrequesting a value; enter either a number or a formula in cellswith a "?" . | ||||||||||||
| (a)(1) | Total Materials Variance: | ||||||||||
| ( | AQ | X | AP | ) | minus | ( | SQ | X | SP) | ) | |
| ( | Value | X | Value | ) | minus | ( | Value | X | Value | ) | |
| = | ? | minus | ? | = | Value | ||||||
| Materials price variance: | |||||||||||
| ( | AQ | X | AP | ) | minus | ( | AQ | X | SP | ) | |
| ( | Value | X | Value | ) | minus | ( | Value | X | Value | ) | |
| = | ? | minus | ? | = | Value | ||||||
| Materials quantity variance: | |||||||||||
| ( | AQ | X | SP | ) | minus | ( | SQ | X | SP | ) | |
| ( | Value | X | Value | ) | minus | ( | Value | X | Value | ) | |
| = | ? | minus | ? | = | Value | ||||||
| (a)(2) | Total Labor Variance: | ||||||||||
| ( | AH | X | AR | ) | minus | ( | SH | X | SR | ) | |
| ( | Value | X | Value | ) | minus | ( | Value | X | Value | ) | |
| = | ? | minus | ? | = | Value | ||||||
| Labor Price variance: | |||||||||||
| ( | AH | X | AR | ) | minus | ( | AH | X | SR | ) | |
| ( | Value | X | Value | ) | minus | ( | Value | X | Value | ) | |
| = | ? | minus | ? | = | Value | ||||||
| Labor quantity variance: | |||||||||||
| ( | AH | X | SR | ) | minus | ( | SH | X | SR | ) | |
| ( | Value | X | Value | ) | minus | ( | Value | X | Value | ) | |
| = | ? | minus | ? | = | Value | ||||||
| (b) | Total Overhead Variance: | ||||||||||
| = | Actual | minus | Overhead | ||||||||
| Overhead | Applied | ||||||||||
| = | Value | minus | Value | = | Value | ||||||
| (c ) | AYALA CORPORATION | ||||||||||
| Income Statement | |||||||||||
| For the Month Ended June 30, 2017 | |||||||||||
| Sales revenue | Value | ||||||||||
| Cost of goods sold (at standard) | ? | ||||||||||
| Gross profit (at standard) | ? | ||||||||||
| Variances | |||||||||||
| Material price | Value | ||||||||||
| Materials quantity | Value | ||||||||||
| Labor price | Value | ||||||||||
| Labor quantity | Value | ||||||||||
| Overhead | Value | ||||||||||
| Totalvariance - favorable | ? | ||||||||||
| Gross profit (actual) | ? | ||||||||||
| Selling and administrative expenses | Value | ||||||||||
| Net income | ? | ||||||||||
1. Which of the following is not part of theoperating budget?
| A. Budgeted income statement | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| B. Sales budget | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| C. Direct materials budget | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| D. Cash budget 2. All of the following budgets are prepared by merchandisingcompanies except
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1. The following data relate to Logan Electric and its LightbulbDivision.
Lightbulb Division sales | $8,500,000 |
Lightbulb Division operating income | $510,000 |
Lightbulb Division total assets | $2,500,000 |
Lightbulb Division current liabilities | $560,000 |
Corporate target rate of return | 16% |
Corporate weighted average cost of capital | 13% |
Corporate effective tax rate | 45% |
What is the Lightbulb Division's capital turnover?
| A. 3.4 | |
| B. 4.5 | |
| C. 16.7 | |
| D. 4.9 |
2. A favorable direct labor efficiency variance might indicatethat
| A. higher skilled workers were usedthat performed the task faster than expected. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| B. higher skilled workers were usedthat performed the task slower than expected. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| C. lower skilled workers were paida higher wage than expected. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| D. lower skilled workers were paid a lower wage thanexpected. 3. Mockingbird Company expects to sell 5,100 bird perches inJanuary and 9,000 in February for $3 each. What will be the totalsales revenue reflected in the sales budget for those months?
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