qattachments_72b5ea87ffba7a646ec8bdf9056f02df7081147c.xlsx, Problem P222A, Page 2 of 2 Page(s), 04/15/201302:17:07
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P222A  Compute variances, and prepare income statement.
Costs and Production Data
Actual
Standard
Raw materials unit cost
$2.25
$2.00
Raw materials units used
10,600
10,000
Direct labor payroll
$122,400
$120,000
Direct labor hours worked
14,400
15,000
Manufacturing overhead incurred
$184,500
Manufacturing overhead applied
$189,000
Machine hours expected to be used at normal capacit
42,500
Budgeted fixed overhead for June
$51,000
Variable overhead rate per hour
$3.00
Fixed overhead rate per hour
$1.20
Overhead is applied on the basis of standard machine hours.
3
hours of machine time are
required for each direct labor hour. The jobs were sold for
$400,000
Selling and administrative
expenses were
$40,000 Assume that the amount of raw materials purchased equaled the amount used.
(a)(1)(a) Compute the total materials variance.
(
Item
×
Item

Item
×
Item
)
(
Amount
×
Value

Amount
×
Value
)
Amount

Amount
Total materials variance =
Formula
Fav/Unf
(a)(1)(b) Compute the materials price variance.
(
Item
×
Item

Item
×
Item
)
(
Amount
×
Value

Amount
×
Value
)
Amount

Amount
Materials price variance =
Formula
Fav/Unf
(a)(1)(c) Compute the materials quantity variance.
(
Item
×
Item

Item
×
Item
)
(
Amount
×
Value

Amount
×
Value
)
Amount

Amount
Materials quantity variance =
Formula
Fav/Unf
(a)(2)(a) Compute the total labor variance.
(
Item
×
Item

Item
×
Item
)
(
Amount
×
Value

Amount
×
Value
)
Amount

Amount
Total labor variance =
Formula
Fav/Unf
(a)(2)(b) Compute the labor price variance.
(
Item
×
Item

Item
×
Item
)
(
Amount
×
Value

Amount
×
Value
)
Amount

Amount
Labor price variance =
Formula
Fav/Unf
(a)(2)(c) Compute the labor quantity variance.
(
Item
×
Item

Item
×
Item
)
(
Amount
×
Value

Amount
×
Value
)
Amount

Amount
Labor quantity variance =
Formula
Fav/Unf
(b) Compute the total overhead variance.
Item

Item
Value

Value
Total overhead variance =
Formula
Fav/Unf
(c) Prepare an income statement for management. Ignore income taxes.
MARTINEZ MANUFACTURING CORPORATION
Income Statement
For the Month Ended June 30, 2012
Title
Amount
Title
Amount
Variances
Formula
Title
Amount
Fav or Unf
Title
Amount
Fav or Unf
Title
Amount
Fav or Unf
Title
Amount
Fav or Unf
Title
Formula
Fav or Unf
Total variance  Unfavorable
Formula Fav or Unf
Title
Formula
Title
Amount
Title
Formula
Accounting
, Fourth Edition by Kimmel, Weygandt, and Kieso
Primer on Using Excel in Accounting
by Rex A Schildhouse
Martinez Manufacturing Corporation accumulates the following data relative to jobs started and finished during the
month of June 2012.
Instructions:
(For "Item", insert "SP" for Standard Price, "SQ" for Standard Quantity, "AP" for Actual Price, "AQ"
for Actual Quantity, "AH" for Actual Hours, "AR" for Actual Rate, "SH" for Standard Hours, "SR" for Standard Rate,
"FOR" for Factory Overhead Rate, "NCH" for Normal Capacity Hours, and "SHA" for Standard Hours Allowed.)