LO.3 (DM variances) In November 2008, Day Time Publisher Company’s costs and quantities of paper consumed in manufacturing its 2009 Executive Planner and calendar were as follows:

Actual unit purchase price $0.065 per page

Standard unit price $0.070 per page

Standard quantity for good production 195,800 pages

Actual quantity purchased during November 230,000 pages

Actual quantity used in November 200,000 pages

a. Calculate the total cost of purchases for November.

b. Compute the material price variance (based on quantity purchased).

c. Calculate the material quantity variance.

EXERCISE 21

LO.3 (OH variances) Joy Ride Corp. has a fully automated production facility in which almost 97 percent of overhead costs are driven by machine hours. As the company’s cost accountant, you have computed the following overhead variances for May:

Variable overhead spending variance $17,000F

Variable overhead efficiency variance 20,600F

Fixed overhead spending variance 14,000U

Fixed overhead volume variance 10,000U

The company’s president is concerned about the variance amounts and has asked you to show her how the variances were computed and to answer several questions. Budgeted fixed overhead for the month is $500,000; the predetermined variable and fixed overhead rates are, respectively, $10 and $20 per machine hour. Budgeted capacity is 10,000 units.

a. Using the four-variance approach, prepare an overhead analysis in as much detail as possible.

b. What is the standard number of machine hours allowed for each unit output?

c. How many actual hours were worked in May?

d. What is the total spending variance?

e. What additional information about the manufacturing overhead variances is gained by inserting detailed computations into the variable and fixed manufacturing overhead variance analysis?

f. How would the overhead variances be closed if the three-variance approach were used?

EXERCISE 17

LO.3 (Allocating joint cost) In one joint process, Hardahl Chemical produces three joint products and one by-product. The following information is available in September 2008.

Sales Value at Cost after Final Selling

Product Gallons Split-Off per Gallon Split-Off Price

JP-4539 4,000 $12 $3 $21

JP-4587 16,000 8 5 14

JP-4591 12,000 15 2 19

Allocate the joint cost of $465,000 to the production based on the

a. Number of gallons;

b. Sales value at split-off, and

c. Approximated net realizable values at split-off.

(Round all percentages to the nearest whole percentage.)

Actual unit purchase price $0.065 per page

Standard unit price $0.070 per page

Standard quantity for good production 195,800 pages

Actual quantity purchased during November 230,000 pages

Actual quantity used in November 200,000 pages

a. Calculate the total cost of purchases for November.

b. Compute the material price variance (based on quantity purchased).

c. Calculate the material quantity variance.

EXERCISE 21

LO.3 (OH variances) Joy Ride Corp. has a fully automated production facility in which almost 97 percent of overhead costs are driven by machine hours. As the company’s cost accountant, you have computed the following overhead variances for May:

Variable overhead spending variance $17,000F

Variable overhead efficiency variance 20,600F

Fixed overhead spending variance 14,000U

Fixed overhead volume variance 10,000U

The company’s president is concerned about the variance amounts and has asked you to show her how the variances were computed and to answer several questions. Budgeted fixed overhead for the month is $500,000; the predetermined variable and fixed overhead rates are, respectively, $10 and $20 per machine hour. Budgeted capacity is 10,000 units.

a. Using the four-variance approach, prepare an overhead analysis in as much detail as possible.

b. What is the standard number of machine hours allowed for each unit output?

c. How many actual hours were worked in May?

d. What is the total spending variance?

e. What additional information about the manufacturing overhead variances is gained by inserting detailed computations into the variable and fixed manufacturing overhead variance analysis?

f. How would the overhead variances be closed if the three-variance approach were used?

EXERCISE 17

LO.3 (Allocating joint cost) In one joint process, Hardahl Chemical produces three joint products and one by-product. The following information is available in September 2008.

Sales Value at Cost after Final Selling

Product Gallons Split-Off per Gallon Split-Off Price

JP-4539 4,000 $12 $3 $21

JP-4587 16,000 8 5 14

JP-4591 12,000 15 2 19

Allocate the joint cost of $465,000 to the production based on the

a. Number of gallons;

b. Sales value at split-off, and

c. Approximated net realizable values at split-off.

(Round all percentages to the nearest whole percentage.)

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