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Posted by: Homeworkhelp
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Posted On: 2018-02-04 06:06:05
 
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E8-14 P8-3 P8-4 P8-5 P8-6 P8-13 Ch8 Problems
E8-14 Calculating factory overhead
The standard capacity of a factory is 8,000 units per month. Cost and production data follow: Standard application rate for fixed overhead . . . . . . $0.50 per unit
Standard application rate for variable overhead . . . $1.50 per unit
Production—Month 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,400 units
Production—Month 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,200 units
Actual factory overhead—Month 1 . . . . . . . . . . . . . . . $15,100
Actual factory overhead—Month 2 . . . . . . . . . . . . . . . $17,200
 
Calculate the amount of factory overhead allowed for the actual volume of production each month and the variance between budgeted and actual overhead for each month.
 
P8-3 Materials and labor variances analyses
Accelerator, Inc., manufactures a fuel additive, Surge, that has a stable selling price of $44 per drum. The company has been producing and selling 80,000 drums per month. In connection with your examination of Accelerator’s financial statements for the year ended September 30, management has asked you to review some computations made by Accelerator’s cost accountant. Your working papers disclose the following about the company’s operations:
Standard costs per drum of product manufactured:
Materials:
8 gallons of chemicals@$2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16
1 empty drum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 $17
Direct labor—1 hour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8
Factory Overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6
Costs and expenses during September:
Chemicals: 645,000 gallons purchased at a cost of $1,140,000; 600,000 gallons used.
Empty drums: 94,000 purchased at a cost of $94,000; 80,000 drums used.
Direct labor: 81,000 hours worked at a cost of $654,480.
Factory overhead: $768,000.
 
Required:
Calculate the following variances for September, using the formulas on page 386:
1. Materials quantity variance.
2. Materials purchase price variance.
3. Labor efficiency variance.
4. Labor rate variance.
 
P8-4 Calculation of materials and labor variances
Prado Corporation manufactures and sells a single product. The company uses a standard cost system. The standard cost per unit of product follows:
Materials—1 lb plastic@$3.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3.00
Direct labor—1.6 hr@$10.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.00
Factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.45
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $23.45
The charges to the manufacturing department for November, when 5,000 units were produced, follow:
Materials—5,300 lb @$3.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,900
Direct labor—8,200 hr@$9.80 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,360
Factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,815
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $120,075
 
The purchasing department normally buys about the same quantity as is used in production during a month. In November, 5,500 pounds were purchased at a price of $2.90 per pound.
 
Required:
Calculate the following variances from standard costs for the data given, using the formulas on pages 386: 
1. Materials quantity.
2. Materials purchase price (at time of purchase).
3. Labor efficiency.
4. Labor rate.
 
P8-5 Analysis of materials and labor variances
Stylized Products, Inc., uses a standard cost system in accounting for the cost of production of its only product, Suave. The standards for the production of one unit of Suave follow:
Direct materials: 10 feet of Class at $0.75 per foot and 3 feet of Chic at $1.00 per foot.
Direct labor: 4 hours at $8.00 per hour.
Factory overhead: applied at 150% of standard direct labor costs.
 
There was no beginning inventory on hand at July 1. Following is a summary of costs and related data for the production of Suave during the following year ended June 30: 100,000 feet of Class were purchased at $0.72 per foot. 30,000 feet of Chic were purchased at $1.05 per foot. 
8,000 units of Suave were produced that required 78,000 feet of Class; 26,000 feet of Chic; and 31,000 hours of direct labor at $7.80 per hour. 6,000 units of product Suave were sold.
On June 30, there are 22,000 feet of Class, 4,000 feet of Chic, and 2,000 completed units of Suave on hand. All purchases and transfers are ‘‘charged in’’ at standard.
 
Required:  Calculate the following, using the formulas on page 386:
1. Materials quantity variance for Class.
2. Materials quantity variance for Chic.
3. Materials purchase price variance for Class.
4. Materials purchase price variance for Chic.
5. Labor efficiency variance.
6. Labor rate variance.
 
P8-6 Analysis of materials and labor variances
TBA Products Companymanufactures a variety of products made of plastic and aluminum components. During the winter months, substantially all of the production capacity is devoted to the production of lawn sprinklers for the following spring and summer seasons.
 
Other products aremanufactured during the remainder of the year. The company has developed tandard costs for its several products. Standard costs for each year are set in the preceding October. The standard cost of a sprinkler for the current year is $3.70, computed as follows:
Direct materials:
Aluminum—0.2 lb@$0.40 per lb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.08
Plastic—1.0 lb @$0.38 per lb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.38
Production labor—0.3 hr@$8.00 per hr . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.40
Factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.84
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3.70
 
During February, TBA Products manufactured 8,500 good sprinklers. The company incurred the following costs, which it charged to production:
Materials requisitioned for production:
Aluminum—1,900 lb@$0.40 per lb . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 760
Plastic—Regular grade—6,000 lb@$0.38 per lb . . . . . . . . . . . . . . . . 2,280
Low grade—3,500 lb@$0.38 per lb . . . . . . . . . . . . . . . . . . . . . . . . . . 1,330
Production labor—2,700 hr@$8.60 per hr . . . . . . . . . . . . . . . . . . . . . . . 23,220
Factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,140
Costs charged to production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $34,730
 
Materials price variations are not determined by usage but are charged to a materials price variation account at the time the invoice is entered. All materials are carried in inventory at standard prices. Materials purchases for February were as follows:
Aluminum—1,800 lb @$0.48 per lb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 864

Solutions
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Attachment 1: E8-14 P8-3 P8-4 P8-5 P8-6 P8-13 Ch8 Problems.xls
Solution Posted By: Homeworkhelp    Posted on: 04-02-2018