# ch11 - SOLUTIONS TO EXERCISESSET B EXERCISE 11-1B (a)...

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SOLUTIONS TO EXERCISES—SET B EXERCISE 11-1B (a) Direct materials: (2,000 X 3) X \$5 = \$30,000 Direct labor: (2,000 X 1/2) X \$16 = \$16,000 Overhead: \$16,000 X 70% = \$11,200 (b) Direct materials: 3 X \$5 = \$15.00 Direct labor: 1/2 X \$16 = 8.00 Overhead: \$8 X 70% = 5.60 Standard cost: \$28.60 (c) The advantages of standard costs which are carefully established and prudently used are: 1. Management planning is facilitated. 2. Greater economy is promoted by making employees more cost- conscious. 3. Setting prices is facilitated. 4. Management control is enhanced by having a basis for evaluation of cost control. 5. Variances are highlighted in management by exception. 6. Costing of inventories is simplified and clerical cost are reduced. EXERCISE 11-2B Ingredient Amount Per Gallon Standard Waste Standard Usage Standard Price Standard Cost Per Gallon Grape concentrate Sugar (54 ÷ 50) Lemons (60 ÷ 50) Yeast Nutrient Water (2,500 ÷ 50) 60* oz. 1.08 lb. 1.2 1 tablet 1 tablet 50 oz. 4% 10% 20% 0% 0% 0% (a) (b) (c) 62.5 oz. 1.2 lb. 1.5 1 tablet 1 tablet 50 oz. \$.06 .30 .66 .25 .20 .004 \$3.75 .36 .99 .25 .20 .20 \$5.75 *3,000 ÷ 50 (a) .96X = 60 ounces; or X = (60 ounces)/.96. (b) .90X = 1.08 pounds; or X = (1.08 pounds)/.90. (c) .80X = 1.2 lemons; or X = (1.2 lemons)/.80. © 2008 For Instructor Use Only 11-1

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EXERCISE 11-3B Direct materials Cost per pound [\$3 – (2% X \$3) + \$0.25] \$3.19 Pounds per unit (4.5 + 0.5) X 5 \$15.95 Direct labor Cost per hour (\$10 + \$3) \$ 13 Hours per unit (2 + .1) X 2.1 27.30 Manufacturing overhead 2.1 hours X \$6 12.60 Total standard cost per unit \$55.85 EXERCISE 11-4B (a) Actual service time Setup and downtime Cleanup and rest periods Standard direct labor hours per oil change 0.80 hours 0.08 hours 0.24 hours 1.12 hours (b) Hourly wage rate Payroll taxes (\$12 X 10%) Fringe benefits (\$12 X 25%) Standard direct labor hourly rate \$12.00 1.20 3.00 \$16.20 (c) Standard direct labor cost per oil change = = 1.12 hours X \$16.20 per hour \$18.14 (d) Direct labor quantity variance = = = (1.30 hours X \$16.20) – (1.12 hours X \$16.20) \$21.06 – \$18.14 \$2.92 U © 2008 For Instructor Use Only 11-2
EXERCISE 11-5B (a) Total materials variance: ( AQ X AP ) (27,000 X \$3.75) \$101,250 ( SQ X SP ) (26,000* X \$4.00) \$104,000 = \$2,750 F *13,000 X 2 Materials price variance: ( AQ X AP ) (27,000 X \$3.75) \$101,250 ( AQ X SP ) (27,000 X \$4.00) \$108,000 = \$6,750 F Materials quantity variance: ( AQ X SP ) (27,000 X \$4.00) \$108,000 ( SQ X SP ) (26,000 X \$4.00) \$104,000 = \$4,000 U (b) Total materials variance: ( AQ X AP ) (25,200 X \$4.15) \$104,580 ( SQ X SP ) (26,000 X \$4.00) \$104,000 = \$580 U Materials price variance: ( AQ X AP ) (25,200 X \$4.15) \$104,580 ( AQ X SP ) (25,200 X \$4.00) \$100,800 = \$3,780 U Materials quantity variance: ( AQ X SP ) (25,200 X \$4.00) \$100,800 ( SQ X SP ) (26,000 X \$4.00) \$104,000 = \$3,200 F © 2008 For Instructor Use Only 11-3

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EXERCISE 11-6B (a) Total labor variance: ( AH X AR
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## ch11 - SOLUTIONS TO EXERCISESSET B EXERCISE 11-1B (a)...

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