coursehero_chapter 8 problems

# coursehero_chapter 8 problems - PROBLEM 8-12B Comprehensive...

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PROBLEM 8-12B Comprehensive Variance Analysis (1a) Materials price variance: \$3,100 F (2) Net variance: \$5,850 U Kramer Toy Company manufactures a plastic swimming pool at its East Crest Plant. The plant has been experiencing problems as shown b Budgeted Actual Sales (16,000 pools) \$544,000 \$544,000 Variable expenses: Variable cost of goods sold* 257,280 263,130 Variable selling expenses Total variable expenses Contribution margin Fixed expenses: Manufacturing overhead 140,000 140,000 Selling and administrative Total fixed expenses Net operating income *Contains direct materials, direct labor, and variable manufacturing overhead. Janet Wilson, who has just been appointed general manager of the East Crest Plant, has been given instructions to “get things under control.” Upon reviewing th Ms. Wilson has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per s Standard Quantity Standard Price or Hours or Rate Direct materials 3 pounds \$2.40 per pound Direct labor 0.8 hour \$9.50 per hour 7.6 Variable manufacturing overhead 0.4 hour* \$3.20 per hour Total standard cost \$16.08 * Based on machine-hours. Ms. Wilson has determined that during September the plant produced 16,000 pools and incurred the following costs: a. Purchased 62,000 pounds of materials at a cost of \$2.35 per pound. b. Used 51,200 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.) c. Worked 12,200 direct labor-hours at a cost of \$10.20 per hour. d. Incurred variable manufacturing overhead cost totaling \$18,910 for the month. A total of 6,100 machine-hours were recorded. It is the company’s policy to close all variances to cost of goods sold on a monthly basis. Required: 1 Compute the following variances for September: a. Direct materials price and quantity variances. 21,600 21,600 278,880 284,730 265,120 259,270 85,000 85,000 225,000 225,000 \$ 40,120 \$ 34,270 Standard Cost \$ 7.20 1.28

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b. Direct labor rate and efficiency variances. c. Variable overhead spending and efficiency variances. 2 Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month. What impact did 3 Pick out the two most significant variances that you computed in (1) above. Explain to Ms. Wilson possible causes of these variances. PROBLEM 8-13B Basic Variance Analysis (1a) Materials price variance: \$8,540 F (2a) Labor efficiency variance: \$9,600 U Riley Labs, produces various chemical compounds for industrial use. One compound, called Lundor, is prepared using an elaborate distilling process. The compa Standard Quantity Standard Price Standard Cost or Rate Use the following framework: Direct materials 2.4 ounces \$19.50 per ounce \$46.80 Purchased Used Direct labor 1.5 hours \$12.80 per hour 19.2 AP x AQ SP x AQ SP x AQ Variable manufacturing overhead 1.5 hours \$3.20 per hour \$70.80 MATERIALS VARIANCES Actual
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## This note was uploaded on 07/07/2011 for the course ACCT 202 at Clemson.

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coursehero_chapter 8 problems - PROBLEM 8-12B Comprehensive...

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