Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 7, Problem 7.29E
Price and efficiency variances,
Direct materials: 10 lb. at $4.50 per lb. | $45.00 |
Direct manufacturing labor: 0.5 hour at $30 per hour | 15.00 |
The number of finished units budgeted for January 2017 was 10,000; 9,850 units were actually produced. Actual results in January 2017 were as follows:
Direct materials: 98,055 lb. used | |
Direct manufacturing labor: 4,900 hours | $154,350 |
Assume that there was no beginning inventory of either direct materials or finished units.
During the month, materials purchased amounted to 100,000 lb., at a total cost of $465,000. Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage.
- 1. Compute the January 2017 price and efficiency variances of direct materials and direct manufacturing labor.
- 2. Prepare journal entries to record the variances in requirement 1.
- 3. Comment on the January 2017 price and efficiency variances of Schuyler Corporation.
- 4. Why might Schuyler calculate direct materials price variances and direct materials efficiency variances with reference to different points in time?
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
The Schuyler Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor:
Direct materials: 10 lb. at $4.50 per lb. $45.00
Direct manufacturing labor: 0.5 hour at $30 per hour 15.00
The number of finished units budgeted for January 2017 was 10,000; 9,850 units were actually produced. Actual results in January 2017 were as follows:
Direct materials: 98,055 lb. used
Direct manufacturing labor: 4,900 hours $154,350
Assume that there was no beginning inventory of either direct materials or finished units. During the month, materials purchased amounted to 100,000 lb., at a total cost of $465,000. Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage.
Q1Comment on the January 2017 price and efficiency variances of Schuyler Corporation.
The Schuyler Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor:
Direct materials: 10 lb. at $4.50 per lb. $45.00
Direct manufacturing labor: 0.5 hour at $30 per hour 15.00
The number of finished units budgeted for January 2017 was 10,000; 9,850 units were actually produced. Actual results in January 2017 were as follows:
Direct materials: 98,055 lb. used
Direct manufacturing labor: 4,900 hours $154,350
Assume that there was no beginning inventory of either direct materials or finished units. During the month, materials purchased amounted to 100,000 lb., at a total cost of $465,000. Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage.
Q1Why might Schuyler calculate direct materials price variances and direct materials efficiency variances with reference to different points in time?
The Schuyler Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor:
Direct materials: 10 lb. at $4.50 per lb. $45.00
Direct manufacturing labor: 0.5 hour at $30 per hour 15.00
The number of finished units budgeted for January 2017 was 10,000; 9,850 units were actually produced. Actual results in January 2017 were as follows:
Direct materials: 98,055 lb. used
Direct manufacturing labor: 4,900 hours $154,350
Assume that there was no beginning inventory of either direct materials or finished units. During the month, materials purchased amounted to 100,000 lb., at a total cost of $465,000. Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage.
Q1.Compute the January 2017 price and efficiency variances of direct materials and direct manufacturing labor.
Q2. Prepare journal entries to record the variances in requirement 1.
Chapter 7 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 7 - What is the relationship between management by...Ch. 7 - What are two possible sources of information a...Ch. 7 - Distinguish between a favorable variance and an...Ch. 7 - What is the key difference between a static budget...Ch. 7 - Why might managers find a flexible-budget analysis...Ch. 7 - Describe the steps in developing a flexible...Ch. 7 - List four reasons for using standard costs.Ch. 7 - How might a manager gain insight into the causes...Ch. 7 - List three causes of a favorable direct materials...Ch. 7 - Describe three reasons for an unfavorable direct...
Ch. 7 - How does variance analysis help in continuous...Ch. 7 - Why might an analyst examining variances in the...Ch. 7 - Prob. 7.13QCh. 7 - When inputs are substitutable, how can the direct...Ch. 7 - Benchmarking against other companies enables a...Ch. 7 - Metal Shelf Companys standard cost for raw...Ch. 7 - All of the following statements regarding...Ch. 7 - Amalgamated Manipulation Manufacturings (AMM)...Ch. 7 - Atlantic Company has a manufacturing facility in...Ch. 7 - Basix Inc. calculates direct manufacturing labor...Ch. 7 - Flexible budget. Sweeney Enterprises manufactures...Ch. 7 - Flexible budget. Bryant Companys budgeted prices...Ch. 7 - Flexible-budget preparation and analysis. Bank...Ch. 7 - Flexible budget, working backward. The Clarkson...Ch. 7 - Flexible-budget and sales volume variances....Ch. 7 - Price and efficiency variances. Sunshine Foods...Ch. 7 - Materials and manufacturing labor variances....Ch. 7 - Direct materials and direct manufacturing labor...Ch. 7 - Price and efficiency variances, journal entries....Ch. 7 - Materials and manufacturing labor variances,...Ch. 7 - Journal entries and T-accounts (continuation of...Ch. 7 - Price and efficiency variances, benchmarking....Ch. 7 - Static and flexible budgets, service sector....Ch. 7 - Flexible budget, direct materials, and direct...Ch. 7 - Variance analysis, nonmanufacturing setting. Joyce...Ch. 7 - Comprehensive variance analysis review. Ellis...Ch. 7 - Possible causes for price and efficiency...Ch. 7 - Material-cost variances, use of variances for...Ch. 7 - Direct manufacturing labor and direct materials...Ch. 7 - Direct materials efficiency, mix, and yield...Ch. 7 - Direct materials and manufacturing labor...Ch. 7 - Direct materials and manufacturing labor...Ch. 7 - Use of materials and manufacturing labor variances...Ch. 7 - Direct manufacturing labor variances: price,...Ch. 7 - Direct-cost and selling price variances. MicroDisk...Ch. 7 - Variances in the service sector. Derek Wilson...Ch. 7 - Prob. 7.47P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Listed below are the budgeted factory overhead costs for 2011 for Moss Industries at a projected level of 2,000 units: Required: Prepare flexible budgets for factory overhead at the 1,000, 2,000, and 4,000 unit levels. (Hint: You must first decide which of the listed costs should be considered variable and which should be fixed.)arrow_forwardCool Car Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2014 are as follows: The selling price per vehicle is $29,000. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 500 units. There are no price, efficiency, or spending variances. Any production-volume variance is written off to cost of goods sold in the month in which it occurs. Requirements: Prepare April and May 2014 income statements for Cool Car Motors under (a) variable costing and (b) absorption costing. Prepare a numerical reconciliation and explanation of the difference between operating income for each month under variable costing and absorption costing.arrow_forwardThe Schuyler Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labour: Direct materials: 10 lb. at $4.50 per lb. $45.00 Direct manufacturing labour: 0.5 hours at $30 per hour 15.00 The number of finished units budgeted for January 2020 was 10,000; 9,850 units were actually produced. Actual results in January 2020 were as follows: Direct materials: 98,055 lb. used Direct manufacturing labour: 4,900 hours $154,350 Assume that there was no beginning inventory of either direct materials or finished units. During the month, materials purchased amounted to 100,000 lb., at a total cost of $465,000. Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage. Compute the January 2020 price and efficiency variances of direct materials and direct manufacturing labour. Prepare journal…arrow_forward
- - The Sullivan Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor: standard: Direct materials: 10 lb. at $4.90 per lb. Direct manufacturing labor:0.5 hour at $30 per hour $49.00 15.00 The number of finished units budgeted for January 2020 was 9,940; 9,900 units were actually produced. Actual data: Actual results in January 2020 were as follows: Direct materials: 97,500 lb. used Direct manufacturing labor: 4,900 hours $155,575arrow_forwardCool Car Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2018 are provided. (Click to view the data.) The selling price per vehicle is $28,000. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 500 units. There are no price, efficiency, or rate variances. Any production-volume variance is written off to COGS in the month in which it occurs. Required 1. Prepare April and May 2018 statements of comprehensive income for Cool Car Motors under (a) variable costing and (b) absorption costing. 2. Prepare a numerical reconciliation and explanation of the difference between operating income for each month under variable costing and absorption costing. Requirement 1a. Prepare April and May 2018 statements of comprehensive income for Cool Car Motors under variable costing. Complete the top half of the statement of comprehensive income for each month first, and then complete the bottom…arrow_forwardrice and efficiency variances (15 points). The Schuyler Corporation manufactures lamps. It has set upthe following standards per finished unit for direct materials and direct manufacturing labor:Direct materials: 10 lb. at $4.50 per lb. $45.00Direct manufacturing labor: 0.5 hour at $30 per hour 15.00The number of finished units budgeted for January 2017 was 10,000; 9,850 units were actually produced.Actual results in January 2017 were as follows:Direct materials: 98,055 lb. usedDirect manufacturing labor: 4,900 hours $154,350Assume that there was no beginning inventory of either direct materials or finished units.During the month, materials purchased amounted to 100,000 lb., at a total cost of $465,000. Input pricevariances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage.Required:1. Compute the January 2017 price and efficiency variances of direct materials and direct manufacturing labor.arrow_forward
- Cenent Industries, Inc. (GII), developed standard costs for direct material and direct labor, In 2017, GII estimated the following standard costs for one of their major products, the 30- gallon heavy -duty plastic container. Budgeted quantity Budgeted price $20 per pound Direct materials 0.40 pounds Direct labor 0.80 hours $15 per hour During July, Gl produced and sold 4,000 containers using 1,700 pounds of direct materials at an average cost per pound of $15 and 3,225 direct manufacturing labor hours at an average wage of $15.25 per hour. The direct material price variance during July is OA $2,000 unfavorable OB. $20,000 unfavorable OC. $8,500 unfavorable O D. S8,500 favorable Calculator Next MacBook Pro esc ) %23 4. 7. 8 delete Y U D F H K %#3arrow_forward. Best Around, Inc., is a manufacturer of vacuums and uses standard costing. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of budgeted machine-hours. In 2017, budgeted fixed manufacturing overhead cost was $17,000,000. Budgeted variable manufacturing overhead was $10 per machine-hour. The denominator level was 1,000,000 machine-hours. Q.Suppose that 1,125,000 machine-hours were allowed for actual output produced in 2017, but 1,200,000 actual machine-hours were used. Actual manufacturing overhead was $12,075,000, variable, and $17,100,000, fixed. Compute (a) the variable manufacturing overhead spending and efficiency variances and (b) the fixed manufacturing overhead spending and production-volume variancesarrow_forward. Best Around, Inc., is a manufacturer of vacuums and uses standard costing. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of budgeted machine-hours. In 2017, budgeted fixed manufacturing overhead cost was $17,000,000. Budgeted variable manufacturing overhead was $10 per machine-hour. The denominator level was 1,000,000 machine-hours. Q. Prepare a graph for fixed manufacturing overhead. The graph should display how Best Around, Inc.’s fixed manufacturing overhead costs will be depicted for the purposes of (a) planning and control and (b) inventory costing.arrow_forward
- Tempus, Inc. manufactures clocks and uses a standard costing system. Tempus uses direct labor-hours to allocate fixed overhead. Here are the company's data regarding budgeted and actual fixed overhead for 2020: Actual Static Budget Output (in units = clocks) 500,000 units 480,000 units Total direct labor hours (DLH) 240,000 DLH Total fixed overhead costs $756,000 $720,000 A. Calculate all fixed overhead variances and any overapplied or underapplied fixed overhead. Show all answers and well-labeled supporting calculations on the worksheet. B. Record journal entries for all fixed overhead activity for the year, including recording the variances and the required closing journal entries at year-end. Use the blank general journal on page 3 of the worksheet.arrow_forwardAniment Industries, Inc. (AII), developed standard costs for direct material and direct labor. In 2015, AII estimated the following standard costs for one of their major products, the 10-gallon plastic container.. Budgeted quantity Budgeted price Direct materials 0.10 pounds $60 per pound Direct labor 0.05 hours $30 per hour During June, AII produced and sold 20,000 containers using 1,900 pounds of direct materials at an average cost per pound of $64 and 1,000 direct manufacturing labor-hours at an average wage of $30.50 per hour.The direct manufacturing labor efficiency variance during June is ________.arrow_forwardBondi Corporation makes automotive engines. For the most recent month, budgeted production was 3,500 engines. The standard power cost is $1.50 per machine-hour. The company's standards indicate that each engine requires 11.3 machine-hours. Actual production was 3,800 engines. Actual machine-hours were 41,340 machine-hours. Actual power cost totaled $66,642. Required: Determine the rate and efficiency variances for the variable overhead item power cost and indicate whether those variances are unfavorable or favorable. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Variable Overhead Rate Variance : ? Variable Overhead efficiency Variance: ?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY