On may 1 2012 bailey company began the manufacture of

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Cornerstones of Cost Management
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Chapter 20 / Exercise 1
Cornerstones of Cost Management
Hansen/Mowen
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On May 1, 2012, Bailey Company began the manufacture of a new paging machine known as Dandy. The company installed astandard costing system to account for manufacturing costs. The standard cost for a unit of Dandy and other information follow:The standard costs for a unit of Dandy follow:Direct materials2 at714Direct manufacturing labor0.5 at2412Manufacturing overhead 80.00%9.635.6The following data were obtained from Bailey's records for the month of May.DebitCreditRevenues 121500Accounts Payable Control (for May's purchases of direct materials)73500Direct materials price variance4000Direct materials efficiency variance2800Direct manufacturing labor price variance1500Direct manufacturing labor efficiency variance2300Actual Production in May was4500 units of Dandy, and actual sales in May were 2700 units. The amount shown for direct materialsprice variance applies to materials purchased during May. There was no beginning inventory of materials on May 1, 2012.Requirement.1. Compute each of the followings items for Bailey for the month of May. Show your computations by first selecting the formulato compute the amount then entering the amounts in the formula and solving for your answer.Requirement 1:Actual Units producedStandard DL hours per unitStandard direct manuf. Labor-hours allowed for actual output produced45000.52250Requirement 2:Flexible budget for DLEfficiency VarianceBudgeted DL rate per hour3150024Requirement 3: Actual DL costActual DL hoursRequirement 4Actual Units producedStandard lbs per unit450029000Requirement 5:Flexible Budget for DMEfficiency VarianceStandard DM price per job630007Requirement 6:Actual costs incurred for DMPrice VarianceStandard DM price per pound735007Requirement 7:Actual DM costActual Pounds purchased73500
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Cornerstones of Cost Management
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Chapter 20 / Exercise 1
Cornerstones of Cost Management
Hansen/Mowen
Expert Verified
Sheet18Page 18Zanella's Smart Shawls, Inc., is a small business that Zanella developed while in college. She began hand-knitting shawls for her dormfriends to wear while studying. As demand grew, she hired some workers and began to manager the operating. Zanella's shawls require wool and labor. She experiments with the type of wool that she uses, and she has great variety in the shawls she produces. Zanellahas bimodal turnover in her labor. She has some employees who have been with her for a very long time and others who are new and inexperienced.Zanella uses standard costing for her shawls. She expects that a type shawl should take 3 hours to produce, and the standard wagerate is 9 per hour. An average shawl uses13 skeins of wool. Zanella shops around for good deals, and expects to pay3.4 perskein.Zanella uses a just-in-time inventory system, as she has clients tell her what type and color of wool they would like her to use.For the month of April, Zanella's workers produce200 shawls using580 hours and3300 skeins of wool. Zanella bought wool for10690 (and used the entire quantity) and incurred labor costs of5650Requirement 1:112205220Price Variance530F2600Efficiency Variance2380U6008840Price Variance430U5400Efficiency Variance180FRequirement 2:Direct Materials Control11220Direct Materials Price Variance530

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