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BProblemsChapter 20

BProblemsChapter 20 - Problem 20-1 Beta Company a Material...

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Problem 20-1: Beta Company a. Material variance: Price variance = Price x Actual Quantity X Price variance = ($13 - $12.40) x 39,000 = $23,400 F Y Price variance = ($8.50 - $8.70) x 11,000 2,200 U 21,200 F Usage variance = Quantity x Standard Price X Usage variance = (4 x 4,200 + 6 x 3,600 - 39,000) x $13.00 = $7,800 U Y Usage variance = (1 x 4,200 + 2 x 3,600 - 11,000) x $ 8.50 = 3,400 F $4,400 U b. Labor variances Rate variance = ($14 - $13.60) x 2,025 = $810 F Efficiency variance = (1/5 x 4,200 + 1/3 x 3,600 – 2,025) x $14 = 210 F c. There would be no changes in the answers to 1 and 2. Prime cost variances are always based on actual production volume, not planned volume. (Some students need frequent reminding of this fact.) d. Again, there would be no change; sales volume has no direct impact on production volume, and hence, not on production cost variances. Problem 20-2: Delta Company b. Budgeted overhead at standard volume = $100,000 + $26.00 (5,000) = $230,000 c. Overhead absorption rate = $230,000 ÷ 5,000 units = $46.00/unit d. May absorbed overhead = $46.00/unit x 6,000 units = $276,000 e. Volume variance = Absorbed - Budgeted = $276,000 - [$100,000 + $26.00 (6,000)] = $20,000 F f. Spending variance = Budgeted - Actual = $256,000 - $280,000 = $24,000 U g. Net variance = Absorbed - Actual =$276,000 - $280,000 = $4,000 U
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