ch10 - Chapter 10 Homework Exercise 10-1 Exercise 10-8...

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Chapter 10 Homework: Exercise 10-1; Exercise 10-8; Problem 10-10 Standard Costs and Variances Final Exam Review: Exercise 10 -1: Material Variances: [LO1] - Harmon Household Products, Inc. manufactures a number of consumer items for general household use. One of these products, a chopping board, requires an expensive hardwood. During a recent month, the company manufactured 4,000 chopping boards using 11,000 board feet of hardwood. The hardwood cost the company $18,700 - The company’s standards for one chopping board are 2.5 board feet of hardwood, at a cost of $1.80 per board foot. - Required : (1) According to the standards, what cost for wood should have been incurred to make 4,000 chopping blocks? - 4000 chopping blocks 2.5 board feet/1 chopping block - Standard Price = $1.80/board foot - 4,000 chopping blocks x 2.5 board feet x $1.80 = $18,000 - ANSWER = $18,000 a. How much greater or less is this than the cost that was incurred? - Cost that was incurred = $18,700 - Standard Cost = $18,000 - $18,700 - $18,000 = $700 - ANSWER = $700 more was paid than was set by the standards (2) Break down the difference computed in (1) above into a materials price variance and a materials quantity variance? a. Materials Price Variance = AQ(AP – SP) a.i. $18,700/11,000 board feet = $1.70 = Actual Price (AP) a.ii. Standard Price (SP) = $1.80 a.iii. Actual Quantity (AQ) = 11,000 board feet a.iv. Standard Quantity = 10,000 board feet a.v. Materials Price Variance = AQ (AP – SP) MPV = 11,000 ($1.70 - $1.80) MPV = 11000 x -$0.10
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  • Spring '11
  • Cerino
  • Direct material price variance, Materials¬†quantity¬†variance, materials price variance, Standard Cost Systems

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ch10 - Chapter 10 Homework Exercise 10-1 Exercise 10-8...

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