ACTG 2300 Chapter 10: Chapter 10

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erindog119

9 Nov 2016

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Mpv = (aq * ap) (aq*sp) Lrv = ah(ar-sr: labor efficiency variance: the difference between the actual hours used and the standard hours allowed for the actual output, multiplied by the standard hourly rate. Vohrv = ah(ar-sr: variable overhead efficiency variance: measures the difference between the actual level of activity and the standard activity allowed for the actual output, multiplied by the variable part of the predetermined overhead rate. Standard costs: benchmark for measuring performance: advantages: Key element in management (costs conform to standards managers can focus on other issues) Can promote economy and efficiency, provide benchmarks. Simplify bookkeeping responsibility accounting: potential problems: Prepared on a monthly basis, outdated (need daily or even more frequently) Managers use variances only to blame and punish subordinates, cover up unfavorable variances. Favorable variance can be worse than an unfavorable variance. Too much emphasis on meeting the standards.

Related Questions

Diamond Company produces a single product. Thecompany has set the following standards for materials andlabor:

	Standard quantity or hours per unit	Standard price or rate
Direct materials	?pounds per unit	$?per pound
Direct labor	4.0hours per unit	$10per hour

During the past month, the company purchased11,000 pounds of direct materials at a cost of $30,250. All of thismaterial was used in the production of 1,700 units of product.Direct labor cost totaled $69,550 for the month. The followingvariances have been computed:


Materials quantity variance	$	2,360	U
Total materials variance	$	160	U
Labor efficiency variance	$	3,000	F

Required:
1.	Fordirect materials:

a.	Compute the standard price per pound ofmaterials. (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 formaterials for the month's production. (Round your intermediate calculations to 2decimal places.)

Standard quantity

pounds

c.	Compute the standard quantity of materialsallowed per unit of product. (Round your intermediate calculations to 2decimal places.)

Standard quantity

pounds per unit

2.	Fordirect labor:

a.	Compute the actual direct labor hours for themonth.

Actual direct labor hours

Compute the labor rate variance. (Input the amount as a positive value. Leaveno 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 2decimal places. Omit the "$" sign in yourresponse.)

Labor rate variance

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beigealpaca80

17 A manufacturing company that has only one product hasestablished the following standards for its variable manufacturingoverhead. Variable manufacturing overhead standards are based onmachine-hours.

Standard hours per unit of output	3.90	machine-hours
Standard variable overhead rate	$11.25	per machine-hour

The following data pertain to operations for the last month:

Actual hours	8,800	machine-hours
Actual total variable manufacturing overheadcost	$95,850
Actual output	2,200	units

What is the variable overhead efficiency variance for themonth?

$2,692 U

$7,513 F

$2,475 U

$7,513 U

18 The following materials standards have been established for aparticular product:


Standard quantity per unit of output	4.9	grams
Standard price	$12.00	per grams

The following data pertain to operations concerning the productfor the last month:


Actual materials purchased	3,800	grams
Actual cost of materials purchased	$ 44,270
Actual materials used in production	3,100	grams
Actual output	570	units

The direct materials purchases variance is computed when thematerials are purchased.

Required:
a.	What is the materials price variance for the month?(Input the amount as a positive value. 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.)

Materials Price Variance_______________

b.	What is the materials quantity variance for the month?(Input the amount a as positive value. 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.)

Materials quantity variance____________

purplemarten16

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

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

peareel62

ACTG 2300 Chapter 10: Chapter 10

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