Selected data relating to the month's production follow:There was no beginning inventory of raw materials. The variable manufacturing overhead rate is based on direct labor-hours.Required:1.For direct materials: a.Compute the price and quantity variances for October.b.Prepare journal entries to record activity for October.2.For direct labor: aCompute the rate and efficiency variances for October.
.b.Prepare a journal entry to record labor activity for October3.For variable manufacturing overhead: a.b.Compute the spending variance for October, and verify theabove.If manufacturing overhead is applied to production on the it possible to have a favorable direct labor efficiency variavariable overhead efficiency variance? Explain.4.State possible causes of each variance that you have computedPROBLEM 10B-4 Comprehensive Variance Analysis; Journa[LO1,LO2 ,LO3,LO5]Vermont Mills, Inc., is a large producer of men's and women's clocompany uses standard costs for all of its products. The standard actual costs for a recent period are given below for one of the comproduct lines (per unit of product):During this period, the company produced 4,800 units of product. A comparison of standard and actual costs for the period on a total cost basis is given below:p. 471There was no inventory of materials on hand to start the period. During the period, 21,120 yards of materials were purchased and used in production.Required:
1.For direct materials: a.Compute the price and quantity variances for the period.b.Prepare journal entries to record all activity relating to dire2.For direct labor: a.Compute the rate and efficiency variances.b.Prepare a journal entry to record the incurrence of direct la3.Compute the variable manufacturing overhead rate and efficie4.On seeing the $288 total cost variance, the company's preside$288 is only 0.2% of the $117,504 standard cost for the periodare well under control.” Do you agree? Explain.5.State possible causes of each variance that you have computedCaseAll applicable cases are available with McGraw-Hill's Connect™Accounting.CASE 10B-5 Ethics and the Manager; Rigging Standards Stacy Cummins, the newly hired controller at Merced Home Prodwas disturbed by what she had discovered about the standard cosSecurity Division. In looking over the past several years of quartereports at the Home Security Division, she noticed that the first-qearnings were always poor, the second-quarter earnings were sligthird-quarter earnings were again slightly better, and the fourth quended with a spectacular performance in which the Home Securitmanaged to meet or exceed its target profit for the year. She also concerned to find letters from the company's external auditors to management warning about an unusual use of standard costs at thSecurity Division.
- Spring '14
- Variance, Overapplied Overhead, MicroDrive Corporation