Chapter 10 Homework

# Chapter 10 Homework - Acc nting 225 M Novack Accounting 225...

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Unformatted text preview: Acc ! nting 225 M. Novack Accounting 225 Managerial Accounting Fall 2008 Michael Novack Homework Chapter 10 Acc ! nting 225 M. Novack Exercise 10-2 1 .................................. Number of chopping blocks 4000 ............. Number of board feet per chopping block × 2.5 ................................ Standard board feet allowed 10000 ................................ Standard cost per board foot × \$1.80 .............................................. Total standard cost \$18000 ............................................. Actual cost incurred \$18700 ............................................ Standard cost above 18000 ................................. Total variance—unfavorable \$700 2 Actual Quantity of Inputs, at Actual Price Actual Quantity of Inputs, at Standard Price Standard Quantity Allowed for Output, at Standard Price (AQ × AP) (AQ × SP) (SQ × SP) \$18700 11,000 board feet × \$1.80 per board foot 10,000 board feet × \$1.80 per board foot = \$19,800 = \$18,000 ↑ ↑ ↑ Price Variance, \$1,100 F Quantity Variance, \$1,800 U Total Variance, \$700 U Alternatively: Materials Price Variance = AQ (AP – SP) 11,000 board feet (\$1.70 per board foot* – \$1.80 per board foot) = \$1,100 F *\$18,700 ÷ 11,000 board feet = \$1.70 per board foot. Materials Quantity Variance = SP (AQ – SQ) \$1.80 per board foot (11,000 board feet – 10,000 board feet) = \$1,800 U Acc ! nting 225 M. Novack Exercise 10-6 1 Throughput time = Process time + Inspection time + Move time + Queue time = 2.8 days + 0.5 days + 0.7 days + 4.0 days = 8.0 days 2. Only process time is value-added time; therefore the manufacturing cycle efficiency (MCE) is: 3. If the MCE is 35%, then the complement of this figure, or 65% of the time, was spent in non-value-added activities. 4 Delivery cycle time = Wait time + Throughput time = 16.0 days + 8.0 days = 24.0 days 5. If all queue time in production is eliminated, then the throughput time drops to only 4 days (0.5 + 2.8 + 0.7). The MCE becomes: Thus, the MCE increases to 70%. This exercise shows quite dramatically how the lean production approach can improve operations and reduce throughput time. Acc ! nting 225 M. Novack Exercise 10-9 1. a. Notice in the solution below that the materials price variance is computed on the entire amount of materials purchased, whereas the materials quantity variance is computed only on the amount of materials used in production.variance is computed only on the amount of materials used in production....
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Chapter 10 Homework - Acc nting 225 M Novack Accounting 225...

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