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MANAGERIAL ACCOUNTING 1. Summertime, Inc. manufactures changeable type-heads for use on industrial printers. Each type-head is in a set consisting of...

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1. Summertime, Inc. manufactures changeable type-heads for use on industrial printers. Each type-head is in a set consisting of the lead alloy type-head itself, a cover for the key on the printer keyboard, and a container box to hold the two items. At the beginning and end of June, there were no materials inventories. The following standards were developed for each unit: Item Materials: Lead alloy (3 oz. @ $.20). ......... Cover materials (6 oz. @ $.04). .... Container boxes (1 @ $.10). ........ Direct labor (1/4 hr. @ $12 per hr). ..... Overhead ($9 per direct labor hour). ..... Total cost. ........................ Standard per Unit $ .60 .24 .10 3.00 2.25 $6.19 Annual production is estimated at 50,000 units, with fixed overhead of $15,000. During the past year, the following costs were incurred to produce 40,000 units: Materials: Lead alloy…………………………122,000 oz. @ $.22 Cover materials……………235,000 oz. @ $.04 Container boxes…………………………40,500 @ $.09 Direct labor…………………………………9,500 hrs. @ $12.50 Overhead……………………………………………………………………………$90,000 REQUIRED : Compute the: A. Materials price variance for each item. B. Materials quantity variance for each item. C. Labor rate variance. D. Labor efficiency variance. E. Budget variance. F. Volume variance. 2. Beachfront Corp. determines that the following variances arose in production during October: Variance Materials price. ................ Materials quantity. ............. Labor efficiency. ............... Labor rate. ..................... Factory overhead efficiency. .... Factory overhead spending. ...... Amount $2,400 Unfav. 1,000 Fav. 500 Fav. 750 Fav. 850 Unfav. 2,100 Unfav. MANAGERIAL ACCOUNTING
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Materials purchases totaled $90,000, while $77,000 in materials were taken from inventory for use in production. Labor payroll totaled $144,000, and actual overhead incurred was $256,000. REQUIRED : Prepare journal entries to record the above variances. 3. Rollerblade Corp. has budgeted fixed overhead costs of $50,000 per month plus a variable rate of $4 per direct labor hour. The total factory overhead rate is $6. Actual factory overhead in October is $115,000 and 18,000 direct labor hours were reported. REQUIRED: A. Compute the total amount of budgeted overhead. (i. e. the amount of overhead that appears on the flexible budget) B. Compute the spending variance. C. Compute the efficiency variance. 4. Graduate Industries has projected sales and production in units for the second quarter of this year as follows: Sales Production April 60,000 50,000 May 40,000 50,000 June 50,000 60,000 Assume that all units will be sold on account for $15 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on April 1 totaled $510,000 ($90,000 from February's sales and the remainder from March). REQUIRED A. Prepare a schedule for each month showing budgeted cash receipts for the company. Cash-related production costs are budgeted at $6 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred, and the balance in the following month. Selling and administrative expenses will amount to $130,000 per month. These expenses include $10,000 per month for depreciation expense on office equipment. The accounts payable balance on April 1 totals $192,000, which will be paid in April. REOUIRED B. Prepare a schedule for each month showing budgeted cash payments for the company.
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