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

• Notes
• 5

This preview shows page 1 - 3 out of 5 pages.

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