Chapter 7 Part 2 Homework Solutions - 7-23(30 min Direct...

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7-23 (30 min.) Direct materials and direct manufacturing labor variances.1.May 2011Actual ResultsPrice VarianceActual Quantity Budgeted PriceEfficiency VarianceFlexible Budget(1)(2) = (1)–(3)(3)(4) = (3) – (5)(5)Units550550Direct materials$12,705.00$1,815.00U$10,890.00a$990.00U$9,900.00bDirect labor$ 8,464.50$ 104.50U$ 8,360.00c$440.00F $8,800.00dTotal price variance$1,919.50UTotal efficiency variance$550.00Ua7,260 meters $1.50 per meter = $10,890b550 lots 12 meters per lot $1.50 per meter = $9,900c1,045 hours $8.00 per hour = $8,360d550 lots 2 hours per lot $8 per hour = $8,800Total flexible-budget variance for both inputs = $1,919.50U + $550U = $2,469.50UTotal flexible-budget cost of direct materials and direct labor = $9,900 + $8,800 = $18,700 Total flexible-budget variance as % of total flexible-budget costs = $2,469.50$18,700 = 13.21%
2.May2012Actual ResultsPrice VarianceActual Quantity Budgeted PriceEfficiencyVarianceFlexible Budget(1)(2) = (1) – (3)(3)(4) = (3) – (5)(5)Units550550Direct materials$11,828.36a$1,156.16 U$10,672.20b $772.20 U $9,900.00cDirect manuf. labor$ 8,295.21d$ 102.41 U$ 8,192.80e$607.20 F $8,800.00cTotal price variance$1,258.57UTotal efficiency variance$165.00UaActual dir. mat. cost, May 2012 = Actual dir. mat. cost, May 2011 0.98 0.95 = $12,705 0.98 0.95 = $11.828.36Alternatively, actual dir. mat. cost, May 2012 = (Actual dir. mat. quantity used in May 2011 0.98) (Actual dir. mat. price in May 2011 0.95) = (7,260 meters 0.98) ($1.75/meter 0.95) = 7,114.80 $1.6625 = $11,828.36b

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