Chapter 10 Selected Problems

Chapter 10 Selected Problems - Exercise 10-6(20 minutes...

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Unformatted text preview: Exercise 10-6 (20 minutes) 1.Standard Quantity Allowed for Actual Output, at Standard Price (SQ × SP) Actual Quantity of Input, at Standard Price (AQ × SP) Actual Quantity of Input, at Actual Price (AQ × AP) 18,000 ounces* × \$2.50 per ounce = \$45,000 20,000 ounces × \$2.50 per ounce = \$50,000 20,000 ounces × \$2.40 per ounce = \$48,000 Materials quantity variance = \$5,000 U Materials price variance = \$2,000 F Spending variance = \$3,000 U *2,500 units × 7.2 ounces per unit = 18,000 ounces Alternatively, the variances can be computed using the formulas: Materials quantity variance = SP (AQ – SQ) = \$2.50 per ounce (20,000 ounces – 18,000 ounces) = \$5,000 U Materials price variance = AQ (AP – SP) = 20,000 ounces (\$2.40 per ounce – \$2.50 per ounce) = \$2,000 F 2. Standard Hours Allowed for Actual Output, at Standard Rate (SH × SR) Actual Hours of Input, at Standard Rate (AH × SR) Actual Hours of Input, at Actual Rate (AH × AR) 1,000 hours* × \$10.00 per hour = \$10,000 900 hours × \$10.00 per hour = \$9,000 \$10,800 Labor efficiency variance = \$1,000 F Labor rate variance = \$1,800 U Spending variance = \$800 U *2,500 units × 0.4 hour per unit = 1,000 hours Alternatively, the variances can be computed using the formulas: Labor efficiency variance = SR (AH – SH) = \$10 per hour (900 hours – 1,000 hours) = 1,000 F Labor rate variance = AH (AR – SR) = 900 hours (\$12 per hour* – \$10 per hour) = \$1,800 U *10,800 ÷ 900 hours = \$12 per hour Exercise 10-7 (15 minutes) Notice in the solution below that the materials price variance is computed on the entire amount of materials purchased, whereas the materials quantity variance is computed only on the amount of materials used in production. Standard Quantity Allowed for Actual Output, at Standard Price (SQ × SP) Actual Quantity of Input, at Standard Price (AQ × SP) Actual Quantity of Input, at Actual Price (AQ × AP) 14,400 ounces* × \$2.50 per ounce = \$36,000 16,000 ounces × \$2.50 per ounce = \$40,000 20,000 ounces × \$2.40 per ounce = \$48,000 Materials quantity variance = \$4,000 U 20,000 ounces × \$2.50 per ounce = \$50,000 Materials price variance = \$2,000 F *2,000 bottles × 7.2 ounces per bottle = 14,400 ounces Alternatively, the variances can be computed using the formulas: Materials quantity variance = SP (AQ – SQ) = \$2.50 per ounce (16,000 ounces – 14,400 ounces) = \$4,000 U Materials price variance = AQ (AP – SP) = 20,000 ounces (\$2.40 per ounce – \$2.50 per ounce) = \$2,000 F Exercise 10-8 (30 minutes) 1. a. Notice in the solution below that the materials price variance is computed on the entire amount of materials...
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Chapter 10 Selected Problems - Exercise 10-6(20 minutes...

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