Week 5 Mod - ~{Fish"Id...

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Unformatted text preview: ~ {Fish-"Id midenymdlfldfltsd'WebPagfifllachonterrb’sfiudentfieamingEKercisempxkoulseFDfli-ESIMQ Stu s erID : 13091}? Std 5510 : 134 Stro | e‘t'er e: ST U D Etc o u a @ alk me through a similar problem El Let's walkthrough a similar problem and calculate the direct materials price variance. Consider Quality Curtains Company, a manufacturer ofwindow curtains. Budgeted and actual activity, as well as standard price and quantity information is provided in the whiteboard area. Standard Price and Quantities Materials yards per unit per yard DL hours per unit per DL hour Labor Remember, the direct materials price variance measures the difference between the price the company paid forthe direct materials purchased and the price the company had budgetedto pay. using standard costs. Winn Planned Produ ction Actual Production unts unts Let's start by recalling howthe direct materials price variance is calculated. Selectthe correct formula from the following choices. Materials Purchased Total Cost of Materials Purchased Materials Used yards yards DL hours used Actual DL cost hours Standard Price X [Actual Quantity Used — Standard Quantity} Actual Quantity Purchased X [Actual Price — Standard Price} Actual Price X (Actual Quantity Used — Standard Quantity} Standard Quantity X (Actual Price — Standard Price} a Enternet| Protected Mode: On 4‘9 V 3110096 V "- - - . on. . b. no... . x l httpsWd msdevmcdufdmstebPagfiftlashfcontentfsiudentfiea rn ing Exercise.aspxicourseIDz4581949 Btu serID: 130917'9 Std 55ID: 134 Stro letype: STUDfitcou % B I ise ' Walk me through a similar problem direct materials price variance. Nowwe have everything we need to calculate the direct materials price variance. Calculate the variance and enter it in the box below. Note: Enter the variance amount as a positive number. Variance = +i'— $ X Actually, the variance is —‘l .000. Just subtract the standard price (‘12) from the actual price (11.67) and multiply bythe actual quantity purchased (3,000]. The last step is deciding whetherthis variance is favorable or unfavorable. A good wayto think about the difierence is this: Avariance is favorable ifthe result is goodforthe company and unfavorable ifit is badforthe company. It is generally a good ideato ignore whether the variance is positive or negative and insteadjust focus on whetherthe variance is goodforthe company. Determine whetherthis $1,000 variance is favorable or unfavorable to Quality Curtains. Standard Price and Quantities Materials 6 12.00 0.5 9.00 Labor WWII Planned Production Actud Production 500 ?00 M aterials Purchm ed Total C ost of Materials Pu rchas ed M aterials Used 3.000 35.000 41.400 360 3.050 DL hours used fictuei DL cost yards per unit peryard DL hours per unit iit perDL hour unfls unfls yids vads hours Actual Quantity Purchased X (Actual Price - Standard Price} 3,000 X (11.666667—12]=—1000 a Internet| Protected Mode: Dn "— I .«IOm—g 5.. on... . Em I httpsflr'dmsdevryedufdrnWebPage5.i'f|ash.-"content-‘studenbl'learningExerci5e.aspxhourseID:45819495tuserID:l3091795tdssID:l345troletype:STUD&cou g l E I Walk me through a similar problem i curllpany. 3 Determine whetherthis $1,000 variance is favorable or unfavorable to Quality Curtains. Favorable Unfavorable \/ Great! The company paid less per unitthan was expected during the budgeting process, so this is a favorable variance. So now we knowthat Quality Curtains has a favorable direct materials price variance of $1,000. This is because the direct materials purchased cost less than the company expectedthem to. Some possible causes ofthis favorable variance are: 1] The managerin charge ofpurchasing skillfully negotiatedalower price. 2) The company bought lower—quality direct materials. 3] The company boughtthe direct materials in bulk, so they received a discount. 4] The marketforthe materials is over—supplied, I driving down prices. l :-r:-:-T'|..::;5' .1 Done 9 Internet | Protected Mode: On {a V 611.00% V . - _ . Eh I a Q n I a - I I I . I httpstr'r'dms.danymdn‘m’WehPagfi/flasMenritemistudmtfiearningExercisempx?cnurseiD:4581949&u5erID:13091?95tdssID:134Btroletype: STUDBtcou g l E I Walk me through a similar problem The next piece is the actual quantity ofdirect materials the company used in production. Standard Price and Quantities Materials 6 vards per unit Enterthe actual quantity ofmaterials used in the box at 12.00 peryard bellow; Labor 0.5 DL hours per unit r '- l 9.00 perDL hour ' WW Planned Production 500 units flctud Production T00 units X No, sorry. The amount ofmaterials used was 861113“? 4.400 Yards- Materials Purchmed 3.000 vards I Total Cost of Materials Purchased 35.000 Materials Used 4.400 vards The last piece ofthe equation is to determine the standard quantity. Calculate the standard quantity of direct materials budgeted for production and enter it in the box below. DL hours used 360 hours actual DL cost 3.060 i Standard Price X [A ctual Quantity Used — Standard Quantity} Quantity = i'. . I I- 12.E|D X [4.400 — Standard Quantity} X No, sorry. This is incorrect. Let's look atthis 12-00 X [4-400 '[ 5x W 3} calculation more closely. Let's start by identifying the standard quantity of materials per unit. Enterthe standard quantity of direct materials per unit in the box below. Quantity = G: Done 9 Internet | Protected Mode: On {a V 611.00% V -'.‘ -' -'-'I 'I II-‘ru -I- ' .. u . 0.. n httpsWd mMMdnfifWebPagfi/fiasMcontenifsmdemfleerning Exerci se.aspx?courseID:4581949 Btu serID:1309179 BidssID: 134 Btroletyp e: STU D St: ou g [E I Walk me through a similar problem “Home aluiiualuquaiilu} u. ...a.e..a.a. A Calculate the standard quantity of direct materials and Stafldfird Pfice and Quantities _ enter it in the box below. Materials 6 st per unit 12.00 peryard Quantity: 4209 Labor 0.5 DL hours per unit 9.00 perDL hour WW \/ Excellent! This is the amount ofdirect materials the Planned Production 500 units company had budgetedto use forthis level of Jam”! Production mu units production. Materials Purchased 3.000 vards ' _ _ Total Cost of Materials Purchased 35.000 Nowwe have everything we needto calculate the direct Materials Used 4 400 “Ids materials quantity variance. ' DLh d 360 h Calculate the direct materials quantity variance and amuguéilfoit 3 060 ours enter it in the box below. Standard Price X [A ctual Quantity Used - Standard Quantity} Direct materials quantity variance: +f- $ 12.00 X [4.400 — 4.200} Answer l i-r:-T-T'|..::;i' .1 Done 9 Internet | Protected Mode: On {a V 611.00% V c— : ...A . 5-. .0... . E. ' httpsWd mMMdnfifWebPagfi/fiaswcontenflsmdentflea rningExerci 5e.a5px?courseID:4581949 Btu serID:1309179 BtclssID: 134 Btroletyp e: STU D St: ou a LE I Walk me through a similar problem It is generally a good ideato ignore whetherthe variance _‘ is positive or negative andjust focus on whetherthe variance is goodforthe company. Determine whetherthis $2,400 variance is favorable or unfavorable to Quality Curtains. Favorable « Unfavorable y Correct! The company used more materials than expectedforthis level of production. So now we knowthatuuality Curtains has an unfavorable direct materials quantity variance of $2,400. This is because the company used more direct materials than the budget calledforto produce 700 units. Some possible causes ofthis unfavorable variance are: ‘1] Lower quality direct materials leadto more scrap or waste. 2] Poorly trained direct labor leadto more scrap or waste. 3] Equipment malfunction caused more scrap or waste. 4] Workers were rushed, leading to more scrap or . waste. l\ :‘r'-"'| fiLi' It I Done 9 Internet | Protected Mode: On {a V 611-0093 V j. WWW n-——.1 _, Eifl I Q] https:.-".-"dms.devry.ed u..-'d n15.-"WebPa g EEr'fIEE h.-"c o ntent-"studentr'lea rningExerci seas px? courseID:4581949&u5er10:l309179&cl551[§|: 1346:1roletyp e: ST U D St: ou g I E I Walk me through a similar problem fl V Very nice work! This variance occurred because the IL] company paid its employees $8.50 per labor hour, but Stand ard price and Quantities expectedto pay $9.00 per hour. rum,— 5 yards per unit 12.00 peryard Labor 0.5 DL hours per unit The last step is deciding whetherthis variance is favorable 300 per [JL hour or unfavorable. A goodway to think about the difierence is this: Avariance is favorable ifthe result is goodforthe WW company and unfavorable ifit is badforthe company. It is manned production 500 units generallyagoodideato ignore whetherthe variance is Actual production mg units positive or negative andjustfocus on whetherthe variance is goodforthe 000193”?- Materials Purchmed 3.000 yards _ _ _ _ Total Cost of Materials Purchased 35.000 Determine whetherthis —$180.00 variance is favorable or Materials Used 4_400 wards unfavorable to Quality Curtains. DL hours used 360 hours actual DL cost 3.060 Favorable Actual Quantity DL hours X [Actual Rate - Standard Rate} ur bl "mm 9 aaoxra.50-s.ooy=-1an.nn V Excellent! Quality Curtains paid it its employees $3.50 per hour, even though the budget expectedto pay $9.00 an hour. This is a goodthing forthe company, so this is afavorable variance. So now we knowthatuuality Curtains has afavorable direct labor rate variance of $180. This is because the rate paid per direct labor hourwas less than the company expected it to be. Some possible causes ofthis favorable variance are: "v I . I .\ r...|..-.. . Done 9 Internet | Protected Mode: On {a V @1100'36 V '- W. I Ex I a, httpsu'fd mack:thde mstebPa g Efflashfcontentr’studentflearningExercise.aspx?courseIDz45819~495tuserIDzl30917951dEEID: 1346:1roletyp e: ST U D St: ou a I E I Walk me through a similar problem fl \/ Nice Work! In orderto produce 700 units, the Id _ _ _ budgetsuggests the company should have used 350 W directlaborhours (700 units)(0.5 DL hours per unit). Materials yards per unit per yard Labor . DL hours per unit Nowwe have everything we needto calculate the direct . per DL hour laborelficiency variance. Budgeted and Actual Information Planned Production 50 units Actual Production ?0 units Calculate the direct labor efficiency variance and enter it inthe box below. Materials Purchased 300 yards Total Cost of Materials Purchased $ 35 ,00 Materials Used 11,40 yards Variance = +J— $ 9|] \/ Nice Job! The variance is the result ofthe difference between the number oflabor hours the DL Hours Used 35 hours company used andthe number oflabor hours the Adua' DL C051 $ 3.05 company bUdgetedm use form!) “mtg orpmdumon' Standard Price per 0L hour X (Actual 0L hours - Standard 0L hours} 9.00)( (350 - 350 }= 90.00 The last step is deciding whetherthis variance is favorable or unfavorable. A goodwayto think aboutthe difference is this: Avariance is favorable ifthe result is goodforthe company and unfavorable ifit is bad for the company. It is generally a good ideato ignore whetherthe variance is positive or negative andjust focus on whether or notthe variance is goodforthe company. Determine whetherthis $90.00 variance is favorable orl V 1 llll y '. r _: .| Done 9 Internet | Protected Mode: On V”; V Q1003; V I. Learni o Emc' .- '. \. X Sorry, this is notthe right equation. Remember, the variable overhead price variance measures the eiTect ofthe difierence between the allocation rate the company budgeted and the allocation rate the companywould have budgeted hadthey known the actual number of labor hours, so we use this equation: Actual Allocation Units * (Actual Rate — Standard Rate] The first step is deciding how many actual allocation units the company used during the period. Because Fancy Cheese Dip uses machine hours to applyvariable overhead, the allocation unit is machine hours. Enterthe actual machine hours used during the periodin the box below. Machine hours used: Answer Standard Price and Quantities Materials Labor Machine Hours Variable Overhead Application Rate Budgeted and Actual Information Planned Production Actual Production Materials Purchased Total Cost of Materials Purchased Materials Used Machine Hours Used Machine Hours Budgeted for Period DL Hours Used Actual DL Cost Total Variable Manufacturing Overhead Actual Fixed Overhead Total Budgeted Fixed Overhead 1,000 000 5,000 00,000 4,000 2,050 2,000 440 5,000 10,000 12,000 14,000 Actual Allocation Units * {Actual Rate — Standard Rate) £31; I g, httpsWdrnsdevlytdufd mstebPa g esfflashfcontentu’studentflearningExercise.aspxhourseID:45819495£user1D=l3091?9&dssID:13451roletyp e: ST U D St: ou g E Walk me through a similar problem fl pounds per unit per pound DL hours per unit per DL hour machine hours perunit permachine hour units units pounds pounds hours hours DL hours Done I {1‘ -.. ming Exercise - Windows IntemetExplurer __ 9 Internet | Protected Mode: On l g, http s:-'-'c|ms .devryed ur'cl n15.-"‘."."ebPa g eEr'flaE h.-"c o ntent-"stuclentr'lea rningExerci seas px? courseIDz4581949 &u5erID:1309179 fithEEID: 1346:1roletyp e: ST U D St: ou g I E I Walk me through a similar problem fl think about what the variable overhead allocation rate would be ifthe company could look into the future while creating the budget and know exactly how many machine hours would be used during the period andthe total variable overhead expense. Let's start by recalling howwe calculate a predetermined overhead rate (PDQ-R]. Select the correct equation from the list below. Total Actual Variable [hierheadal Total Actual Allocation Activity Units Total Budgeted Variable CtrverheadiI Total Budgeted Allocation Activity Units \/ Excellent! The PDORis set at the beginning ofthe period, so the company has to use budgetedinformation. Let's begin by deciding the total budgeted variable overhead, assuming Fancy Cheese Dip can predictthe future and knows EXACTLY how many machine hours itwill use andthe EXACT amount ofvariable overhead. Determine the total budgeted variable overhead in this situation and enter it in the box below. Standard Price and Quantities Materials Labor Machine Hours Variable Overhead Application Rate Budgeted and Actual Information Planned Production Actual Production Materials Purchased Total Cost of Materials Purchased Materials Used Machine Hours Used Machine Hours Budgeted for Period DL Hours Used Actual DL Cost Total Variable Manufacturing Overhead Actual Fixed Overhead Total Budgeted Fixed Overhead 1,000 000 5,000 00,000 4,000 2,050 2,000 440 6,000 10,000 12,000 14,000 Actual Allocation Units ‘ {Actual Rate — Standard Rate] 2,650 ’ (Actual Rate —Standard Rate] pounds per unit per pound DL hours per unit per DL hour machine hours perunit permachine hour units units pounds pounds machine hours machine hours DL hours 2,650 ’ ( (Total Budgeted Variable Overhead I Total Budgeted Allocation Activity Units] — Standard Rate] 9 Internet | Protected Mode: On ...
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Week 5 Mod - ~{Fish"Id...

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