Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Textbook Question
Chapter 8, Problem 19E
The normal capacity of a manufacturing plant is 30,000 direct labor hours or 20,000 units per month.
For each month, make a single
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A manufacturing company is expected to complete a task in 15 minutes. During a recent accounting period, 3,000
completed units were produced, resulting in the following labor variances:
Labor rate variance: $2,720 favorable
Labor efficiency variance: $1,600 unfavorable
The standard labor rate is $16 per hour.
Required:
1. Calculate the standard hours allowed for the work performed.
2. Calculate the actual hours worked.
3. Calculate the actual wage rate. (Round your answer to 2 decimal places.)
1.
Standard hours allowed
2.
Actual hours worked
3 Actual wage rate
Bellingham Company produces a product that requires 3 standard direct labor hours per unit
at a standard hourly rate of $20.00 per hour. 15, 800 units used 63,000 hours at an hourly rate
of $19.65 per hour. This information has been collected in the Microsoft Excel Online file.
Open the spreadsheet, perform the required analysis, and input your answers in the questions
below. Open spreadsheet What is the direct labor (a) rate variance, (b) time variance, and (c)
cost variance? Round your answers to the nearest dollar. Enter a favorable variance as a
negative number using a minus sign and an unfavorable variance as a positive number. a.
Direct labor rate variance $fill in the blank 2 b. Direct labor time variance $fill in the blank 4 c.
Direct labor cost variance $fill in the blank 6
For the stamping department of a manufacturing firm, the standard cost for direct labor is $16 per hour, and the production standard
calls for 2,400 stampings per hour. During February, 148 hours were required for actual production of 350,400 stampings. Actual direct
labor cost for the stamping department for June was $2,220.
Required:
a. Complete the performance report for February.
b. Calculate the direct labor efficiency and rate variances for February.
c. Could reporting the efficiency and rate variances to the appropriate managers improve control over the stamping department's
direct labor?
Complete this question by entering your answers in the tabs below.
Required A Required B Required C
Complete the following performance report for February:
Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e.,
zero variance).
Direct labor
Flexed Budget
Actual
Budget Variance
Chapter 8 Solutions
Principles of Cost Accounting
Ch. 8 - How does a standard cost accounting system work,...Ch. 8 - What is the difference between the standard cost...Ch. 8 - Prob. 3QCh. 8 - What are the specific procedures on which a...Ch. 8 - How are standards for materials and labor costs...Ch. 8 - What is a variance?Ch. 8 - How do price and quantity variances relate to...Ch. 8 - How do rate and efficiency variances relate to...Ch. 8 - Prob. 9QCh. 8 - How does a materials purchase price variance...
Ch. 8 - Prob. 11QCh. 8 - Prob. 12QCh. 8 - When a company uses a standard cost system, are...Ch. 8 - What two factors must be considered when breaking...Ch. 8 - What might cause the following materials...Ch. 8 - What might cause the following labor variances?
An...Ch. 8 - Prob. 17QCh. 8 - Prob. 18QCh. 8 - Prob. 19QCh. 8 - Prob. 20QCh. 8 - When does a flexible-budget variance occur?
Ch. 8 - Why is it important to determine flexible-budget...Ch. 8 - Prob. 23QCh. 8 - What is the significance of a production-volume...Ch. 8 - If production is more or less than the standard...Ch. 8 - At the end of the current fiscal year, the trial...Ch. 8 - What variances from the four-variance method are...Ch. 8 - What is the primary difference between the...Ch. 8 - What are the four variances in the four-variance...Ch. 8 - In all of the exercises involving variances, use F...Ch. 8 - Prob. 2ECh. 8 - Prob. 3ECh. 8 - Prob. 4ECh. 8 - Prob. 5ECh. 8 - Computing materials variances D-List Calendar Co....Ch. 8 - Computing labor variances LIFT Inc. manufactures...Ch. 8 - Standard cost summary; materials and labor cost...Ch. 8 - Computing labor variances Fill in the missing...Ch. 8 - Standard unit cost and journal entries The normal...Ch. 8 - Making journal entries Assume that during the...Ch. 8 - Using variance analysis and interpretation Last...Ch. 8 - Using variance analysis and interpretation Last...Ch. 8 - Journalizing standard costs in two departments...Ch. 8 - Calculating factory overhead The standard capacity...Ch. 8 - Determining Budgeted Overhead The overhead...Ch. 8 - Calculating factory overhead: two variances Munoz...Ch. 8 - Calculating factory overhead: two variances...Ch. 8 - The normal capacity of a manufacturing plant is...Ch. 8 - Calculating amount of factory overhead applied to...Ch. 8 - Georgia Gasket Co. budgets 8,000 direct labor...Ch. 8 - (Appendix) Calculating factory overhead: four...Ch. 8 - (Appendix) Calculating factory overhead: three...Ch. 8 - Materials and labor variances Branca Inspections...Ch. 8 - Materials and labor variances Fausto Fabricators...Ch. 8 - Zippy Inc. manufactures a fuel additive, Surge,...Ch. 8 - Calculation of materials and labor variances
Fritz...Ch. 8 - High-End Products Inc. uses a standard cost system...Ch. 8 - RDI Products Co. manufactures a variety of...Ch. 8 - The standard cost summary for the most popular...Ch. 8 - Carlo Lee Corp. has established the following...Ch. 8 - USD Inc. has established the following standard...Ch. 8 - Allocation of variances
Costa Brava Manufacturing...Ch. 8 - On May 1, Athens Inc. began the manufacture of a...Ch. 8 - The standard specifications for an electric motor...Ch. 8 - Cardiff Inc. manufactures men’s sport shirts for...Ch. 8 - Fargo Co. manufactures products in batches of 100...Ch. 8 - Prob. 15PCh. 8 - (Appendix) Overhead variances—four variance
Mobile...Ch. 8 - Shinto Corp. uses a standard cost system and...Ch. 8 - Kamen Manufacturing Co. estimates the following...Ch. 8 - Prob. 19PCh. 8 - Jillian Manufacturing Inc. manufactures a single...Ch. 8 - Cost and production data for Binghamton Beverages...
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- Case made 24,500 units during June, using 32,000 direct labor hours. They expected to use 31,450 hours per the standard cost card. Their employees were paid $15.75 per hour for the month of June. The standard cost card uses $15.50 as the standard hourly rate. A. Compute the direct labor rate and time variances for the month of June, and also calculate the total direct labor variance. B. If the standard rate per hour was $16.00, what would change?arrow_forwardAt the beginning of the year, Lopez Company had the following standard cost sheet for one of its chemical products: Lopez computes its overhead rates using practical volume, which is 80,000 units. The actual results for the year are as follows: (a) Units produced: 79,600; (b) Direct labor: 158,900 hours at 18.10; (c) FOH: 831,000; and (d) VOH: 112,400. Required: 1. Compute the variable overhead spending and efficiency variances. 2. Compute the fixed overhead spending and volume variances.arrow_forwardKavallia Company set a standard cost for one item at 328,000; allowable deviation is 14,500. Actual costs for the past six months are as follows: Required: 1. Calculate the variance from standard for each month. Which months should be investigated? 2. What if the company uses a two-part rule for investigating variances? The allowable deviation is the lesser of 4 percent of the standard amount or 14,500. Now which months should be investigated?arrow_forward
- Use the following information to complete Brief Exercises 10-25 and 10-26: Tico Inc. produces plastic bottles. Each bottle has a standard labor requirement of 0.03 hour. During the month of April, 900,000 bottles were produced using 25,200 labor hours @ 15.00. The standard wage rate is 13.50 per hour. 10-26 Labor Rate and Efficiency Variances Refer to the information above for Tico Inc. on the previous page Required: Calculate the labor rate and efficiency variances using the columnar and formula approaches.arrow_forwardFargo Co. manufactures products in batches of 100 units per batch. The company uses a standard cost system and prepares budgets that call for 500 of these batches per period. Budgeted fixed overhead is $60,000 per period. The standard costs per batch follow: During the period, 503 batches were manufactured, and the following costs were incurred: Required: Calculate the variances for materials, labor, and overhead. For overhead, use the two-variance method. (Hint: Please use the information given about the budgeted fixed overhead to compute the variable overhead rate.)arrow_forwardJameson Company produces paper towels. The company has established the following direct materials and direct labor standards for one case of paper towels: During the first quarter of the year, Jameson produced 45,000 cases of paper towels. The company purchased and used 135,700 pounds of paper pulp at 0.38 per pound. Actual direct labor used was 91,000 hours at 12.10 per hour. Required: 1. Calculate the direct materials price and usage variances. 2. Calculate the direct labor rate and efficiency variances. 3. Prepare the journal entries for the direct materials and direct labor variances. 4. Describe how flexible budgeting variances relate to the direct materials and direct labor variances computed in Requirements 1 and 2.arrow_forward
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