# A 16000 082 13120 b60800 025 089 13528 c 60000 025

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a 16,000 × \$0.82 = \$13,120b60,800 × 0.25 × \$0.89 = \$13,528c60,000 × 0.25 × \$0.89 = \$13,3502.Actual Costs Incurred(Actual Input Qty.× Actual Price)Actual Input Qty.× Budgeted PriceFlexible Budget(Budgeted Input Qty. Allowed for Actual Output × Budgeted Price)\$13,120a\$14,240b\$13,528c\$1,120 F\$712 UPrice varianceEfficiency variance\$408 FFlexible-budget variancea 16,000 × \$0.82 = \$13,120b16,000 × \$0.89 = \$14,240c 60,800 × 0.25 × \$0.89 = \$13,5283.The favorable flexible-budget variance of \$408 has two offsetting components:(a) favorable price variance of \$1,120––reflects the \$0.82 actual purchase cost being lower than the \$0.89 budgeted purchase cost per pound.(b) unfavorable efficiency variance of \$712––reflects the actual materials yield of 3.80 scones per pound of pumpkin (60,800 ÷ 16,000 = 3.80) being less than the budgeted yield of 4.00 (60,000 ÷ 15,000 = 4.00). The company used more pumpkins (materials) to make the scones than was budgeted.One explanation may be that Peterson purchased lower quality pumpkins at a lower cost per pound.7-9
7-22(15 min.) Materials and manufacturing labor variances.Actual CostsIncurred(Actual Input Qty.× Actual Price)Actual Input Qty.× Budgeted PriceFlexible Budget(Budgeted InputQty. Allowed for Actual Output × Budgeted Price)DirectMaterials\$200,000\$214,000\$225,000\$14,000 F\$11,000 FPrice varianceEfficiency variance\$25,000 FFlexible-budget varianceDirect \$90,000\$86,000\$80,000Mfg. Labor\$4,000 U\$6,000 UPrice varianceEfficiency variance\$10,000 UFlexible-budget variance7-23 (30 min.) Direct materials and direct manufacturing labor variances.1.May 2009Actual ResultsPrice VarianceActual Quantity ×Budgeted PriceEfficiency VarianceFlexible Budget(1)(2) = (1)–(3)(3)(4) = (3) – (5)(5)Units550550Direct materials\$12,705.00\$1,815.00 U\$10,890.00a\$990.00 U\$9,900.00bDirect labor\$ 8,464.50\$ 104.50U\$ 8,360.00c\$440.00 F \$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%7-10
2.May2010Actual ResultsPrice VarianceActual Quantity ×Budgeted PriceEfficiency VarianceFlexible 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 2010 = Actual dir. mat. cost, May 2009 ×0.98 ×0.95 = \$12,705 ×0.98 ×0.95 = \$11.828.36Alternatively, actual dir. mat. cost, May 2010 = (Actual dir. mat. quantity used in May 2009 ×0.98) ×(Actual dir. mat. price in May 2009 ×0.95) = (7,260 meters ×0.98) ×(\$1.75/meter ×0.95) = 7,114.80 ×\$1.6625 = \$11,828.36b(7,260 meters ×0.98) ×\$1.50 per meter = \$10,672.20c Unchanged from 2009. dActual dir. labor cost, May 2010 = Actual dir. manuf. cost May 2009 ×0.98 = \$8,464.50 ×0.98 = \$8,295.21Alternatively, actual dir. labor cost, May 2010= (Actual dir. manuf. labor quantity used in May 2009 ×0.98) ×Actual dir. labor price in 2009= (1,045 hours ×0.98) ×\$8.10 per hour= 1,024.10 hours ×\$8.10 per hour = \$8,295.21e (1,045 hours ×0.98) ×\$8.00 per hour = \$8,192.80Total flexible-budget variance for both inputs = \$1,258.57U + \$165U = \$1,423.57U Total 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 = \$1,423.57÷\$18,700 = 7.61%3.
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