costaccountingCh7

costaccountingCh7 - 7-22(15 min.) Materials and...

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Unformatted text preview: 7-22(15 min.) Materials and manufacturing labor variances. Actual Costs Incurred (Actual Input Qty. × Actual Price) Actual Input Qty.× Budgeted Price Flexible Budget (Budgeted Input Qty. Allowed for Actual Output × Budgeted Price) Direct Materials$200,000$214,000$225,000$14,000 F $11,000 F Price variance Efficiency variance $25,000 F Flexible-budget variance Direct $90,000 $86,000 $80,000 Mfg. Labor$4,000 U $6,000 U Price variance Efficiency variance $10,000 U Flexible-budget variance 7-25 (30 min.) Price and efficiency variances, journal entries. 1. Direct materials and direct manufacturing labor are analyzed in turn: Actual Costs Incurred (Actual Input Qty. × Actual Price) Actual Input Qty. × Budgeted Price Flexible Budget (Budgeted Input Qty. Allowed for Actual Output × Budgeted Price) Direct Materials (100,000 ×$3.10a) $310,000 Purchases Usage (100,000 ×$3.00) (98,073 ×$3.00) $300,000 $294,219 (9,810 ×10 ×$3.00) $294,300 $10,000 U $81 F Price variance Efficiency variance Direct Manufacturing Labor (4,900 ×$21b) $102,900 (4,900 ×$20) $98,000 (9,810 ×0.5 ×$20) or (4,905 ×$20) $98,100 $4,900 U $100 F Price variance Efficiency variance a$310,000 ÷ 100,000 = $3.10 b$102,900 ÷ 4,900 = $21 2. Direct Materials Control 300,000 Direct Materials Price Variance 10,000 Accounts Payable or Cash Control 310,000 Work-in-Process Control 294,300 Direct Materials Control 294,219 Direct Materials Efficiency Variance 81 Work-in-Process Control 98,100 Direct Manuf. Labor Price Variance 4,900 Wages Payable Control 102,900 Direct Manuf. Labor Efficiency Variance 100 3. Some students’ comments will be immersed in conjecture about higher prices for materials, better quality materials, higher grade labor, better efficiency in use of materials, and so forth. A possibility is that approximately the same labor force, paid somewhat more, is taking slightly less time with better materials and causing less waste and spoilage....
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This note was uploaded on 06/23/2011 for the course BUSSINES 2B taught by Professor Hayle during the Spring '11 term at El Camino.

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costaccountingCh7 - 7-22(15 min.) Materials and...

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