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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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