ACCY 121 Chapter 16 Practice Quiz

Fundamentals of Variance Analysis

101 The Hageness Company has had great difficulty in controlling overhead costs At a recent convention the president heard about a control device for overhead costs known as a flexible budget and she has hired you to implement this budgeting program After some effort you develop the following cost formulas for the companys machining department These costs are based on a normal operating range of 15000 to 23000 machine-hours per month

~lachine setup $0 20 per machine-hour Lubricants $100 per machine-hour plus $8000 per month Utilities $070 per machine-hour Indirect labor $0 60 per machine-hour plus $20000 per month Depreciation $32000 per month

During March the first month after your preparation of the above data the machining department worked 18000 machine-hours and produced 9000 units of product The actual costs of this production were

Machine set-up $ 4800 Lubricants 24500 Utilities 12000 Indirect labor 32500 Depreciation 32500

$106300

The department had originally been budgeted to work 19000 machine-hours during March Required Prepare a performance report for the machining department for the month of March including columns for the (a) actual results (b) flexible budget (c) flexible budget variance (d) master budget and (e) sales activity variance

l~1 ( b ) (a-b) ( c ) (6- c ) v claquoaie

f g Ottgt fo1 H I oro Mil I AIIi-4 F~ I tjD Mij Flexible Flex B IIaster Sales

Actual Budget Variance Budget Actiyitv V shy-Machine set-up 4800 3600 1200 U 3800 200 F 2-0 tshy

Lubricants 24500 26000 1500 F 27000 1000 F 00 lt2 ~a-o Utilities 12000 12600 600 F 13300 700 F 1 0 e-shyIndirect labor 32500 30800 1700 U 31400 600 F bull C () l-Of (U)

Depreciation 32500 32000 500 U 32000 _0 e- ~lcnru Total costs 106300 105000 1300 U 107500 2500 F

Master Budget Variable Fixed Machine setup Lubricants Utilities Indirect labor Depreciation Total

$020 x 19000 $100 x 19000 $070 x 19000 $060 x 19000

Flexible Budget Machine setup $020 x 18000

3800 0 19000 8000 13300 0 11 400 20000

0 32000 47500 60000

Variable 3600

Fixed 0

Total 3600

Lubricants $100 x 18000 18000 8000 26000 Utilities $070 x 18000 12600 0 12600 Indirect labor $060 x 18000 10800 20000 30800 Depreciation 0 32000 32000 Total 45000 60000

Feedback

AACSB Analytic AICPA FN-Decision Making Blooms Analysis L0 5 Difficulty Medium Learning Objectiv DL~ MedL~ Topic Area lexible Budgeting

105000

2

105 Western Company manufactures special electrical equipment and parts Western employs a standard cost accounting system with separate standards established for each product Aspecial transformer is manufactured in the Transformer Department Production volume is measured by direct labor hours in this department and a flexible budget system is used to plan and control department overhead Standard costs for the special transformer are determined annually in September for the coming year The standard cost of a transformer was computed at $5700 as shown below

Direct materials Copper 3 spools $300 900

Direct labor 4 hours ( $700 2800 Variable Omiddoterhead 4 hours $300 1200 Fixed overhead 4 hours (jl $200

shy800

Total $5700

Ov ere based upon normal and expected monthly ca it b h of which were 4000 direct labor hours ractical capacity for this department i 5000 direct labor hours per mon ana Ie overhead costs are expected to vary with the num er 0 Irec a or 0

actually used During October([OO transformers were producdJThis was below expectations because a work stoppage occurred during contract negotiatio he I orce Once the contract was settled the wage rate was increased to 725hour and overtime as scheduled in an attempt to catch up to expected production levels The following costs were incurred in October

Direct Materials Copper purchased 2600 spools $308spool

Used 2600 spools Direct labor Regular time 2000 hours $700 Overtime 1400 hours $725

600 of the 1400 hours were subject to overtime premium The total overtime premium is included in variable overhead in accordance with company accounting practices

Overhead Variable $16670 Fixed $ 8800

Required Compute each of the following variances showing all your work Be sure to indicate whether the variances are favorable or unfavorable

3

a Direct materials price variance b Direct material efficiency (quantity) variance c Direct labor rate variance d Direct labor efficiency variance e Variable overhead spending variance f Variable overhead efficiency variance g Fixed overhead spending (budget) variance h Production volume variance

a $208 unfavorable b $300 favorable c $350 unfavorable d $1400 favorable e$6470 unfavorable f $600 favorable g $800 unfavorable h $800 unfavorable

Feedback a ($308 bull $300) x 2600 =$208 unfavorable b [2600 bull (3 x 900)] x $300 =$300 favorable c [($700 x 2000) + ($725 x 1400)] bull ($700 x 3400) =$350 unfavorable d [3400middot (4 x 900)] x $700 = $1400 favorable e $16670 bull ($300 x 3400) =$6470 unfavorable f ($300 x 3400) bull [$300 x (4 x 900)] =$600 favorable g $8800 bull ($200 x 4000) = $800 unfavorable h ($200 x 4000) bull [($200 x (4 x 900)] = $800 unfavorable

AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Medium Learning Objective 5 Learning Objective 6 Topic Area Variable Cost Variance Analysis Fixed Cost Variances

4

Variance Analysis Template

Standard Quantity Allowed for Actual

Actual Inputs at Output atStandard Actual Costs Standard Prices Price

AQ xAP AQxSP SQ x SP

) 7~ols X ~ 5~ho -

Cl(6D

Direct Materials 2bcro ls )(~3 crn4

~~ j

IL~ -=) t 76QJ shy

I $ l-oB a I I ~300 f I Price Variance Quantity Variance

AH x AR AH x SR qlJO 15 I SH x SR

z OW X ~ 7 J 2CJtsO)Xtf7 6D )( 4-tds l 7 ()t)Direct - hS (hY) Vf gtD k-~ 4T5D f- I ILabor

~~=3q-I5D~ ~) ~ or --------_ ~ I

350 a I I I 4-~ F I Rate Variance Efficiency Variance

AHxAR

Actual Flex Budget

L Lf-tnO lL ofp 1D l ~t ~ (51)____ L- Iyrt (

- $rC0)1l I $021 U I

Budget Variance

Variable Overhead

Fixed Overhead

l~1 ( b ) (a-b) ( c ) (6- c ) v claquoaie

f g Ottgt fo1 H I oro Mil I AIIi-4 F~ I tjD Mij Flexible Flex B IIaster Sales

Actual Budget Variance Budget Actiyitv V shy-Machine set-up 4800 3600 1200 U 3800 200 F 2-0 tshy

Lubricants 24500 26000 1500 F 27000 1000 F 00 lt2 ~a-o Utilities 12000 12600 600 F 13300 700 F 1 0 e-shyIndirect labor 32500 30800 1700 U 31400 600 F bull C () l-Of (U)

Depreciation 32500 32000 500 U 32000 _0 e- ~lcnru Total costs 106300 105000 1300 U 107500 2500 F

Master Budget Variable Fixed Machine setup Lubricants Utilities Indirect labor Depreciation Total

$020 x 19000 $100 x 19000 $070 x 19000 $060 x 19000

Flexible Budget Machine setup $020 x 18000

3800 0 19000 8000 13300 0 11 400 20000

0 32000 47500 60000

Variable 3600

Fixed 0

Total 3600

Lubricants $100 x 18000 18000 8000 26000 Utilities $070 x 18000 12600 0 12600 Indirect labor $060 x 18000 10800 20000 30800 Depreciation 0 32000 32000 Total 45000 60000

Feedback

AACSB Analytic AICPA FN-Decision Making Blooms Analysis L0 5 Difficulty Medium Learning Objectiv DL~ MedL~ Topic Area lexible Budgeting

105000

2

105 Western Company manufactures special electrical equipment and parts Western employs a standard cost accounting system with separate standards established for each product Aspecial transformer is manufactured in the Transformer Department Production volume is measured by direct labor hours in this department and a flexible budget system is used to plan and control department overhead Standard costs for the special transformer are determined annually in September for the coming year The standard cost of a transformer was computed at $5700 as shown below

Direct materials Copper 3 spools $300 900

Direct labor 4 hours ( $700 2800 Variable Omiddoterhead 4 hours $300 1200 Fixed overhead 4 hours (jl $200

shy800

Total $5700

Ov ere based upon normal and expected monthly ca it b h of which were 4000 direct labor hours ractical capacity for this department i 5000 direct labor hours per mon ana Ie overhead costs are expected to vary with the num er 0 Irec a or 0

actually used During October([OO transformers were producdJThis was below expectations because a work stoppage occurred during contract negotiatio he I orce Once the contract was settled the wage rate was increased to 725hour and overtime as scheduled in an attempt to catch up to expected production levels The following costs were incurred in October

Direct Materials Copper purchased 2600 spools $308spool

Used 2600 spools Direct labor Regular time 2000 hours $700 Overtime 1400 hours $725

600 of the 1400 hours were subject to overtime premium The total overtime premium is included in variable overhead in accordance with company accounting practices

Overhead Variable $16670 Fixed $ 8800

Required Compute each of the following variances showing all your work Be sure to indicate whether the variances are favorable or unfavorable

3

a Direct materials price variance b Direct material efficiency (quantity) variance c Direct labor rate variance d Direct labor efficiency variance e Variable overhead spending variance f Variable overhead efficiency variance g Fixed overhead spending (budget) variance h Production volume variance

a $208 unfavorable b $300 favorable c $350 unfavorable d $1400 favorable e$6470 unfavorable f $600 favorable g $800 unfavorable h $800 unfavorable

Feedback a ($308 bull $300) x 2600 =$208 unfavorable b [2600 bull (3 x 900)] x $300 =$300 favorable c [($700 x 2000) + ($725 x 1400)] bull ($700 x 3400) =$350 unfavorable d [3400middot (4 x 900)] x $700 = $1400 favorable e $16670 bull ($300 x 3400) =$6470 unfavorable f ($300 x 3400) bull [$300 x (4 x 900)] =$600 favorable g $8800 bull ($200 x 4000) = $800 unfavorable h ($200 x 4000) bull [($200 x (4 x 900)] = $800 unfavorable

AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Medium Learning Objective 5 Learning Objective 6 Topic Area Variable Cost Variance Analysis Fixed Cost Variances

4

Variance Analysis Template

Standard Quantity Allowed for Actual

Actual Inputs at Output atStandard Actual Costs Standard Prices Price

AQ xAP AQxSP SQ x SP

) 7~ols X ~ 5~ho -

Cl(6D

Direct Materials 2bcro ls )(~3 crn4

~~ j

IL~ -=) t 76QJ shy

I $ l-oB a I I ~300 f I Price Variance Quantity Variance

AH x AR AH x SR qlJO 15 I SH x SR

z OW X ~ 7 J 2CJtsO)Xtf7 6D )( 4-tds l 7 ()t)Direct - hS (hY) Vf gtD k-~ 4T5D f- I ILabor

~~=3q-I5D~ ~) ~ or --------_ ~ I

350 a I I I 4-~ F I Rate Variance Efficiency Variance

AHxAR

Actual Flex Budget

L Lf-tnO lL ofp 1D l ~t ~ (51)____ L- Iyrt (

- $rC0)1l I $021 U I

Budget Variance

Variable Overhead

Fixed Overhead

105 Western Company manufactures special electrical equipment and parts Western employs a standard cost accounting system with separate standards established for each product Aspecial transformer is manufactured in the Transformer Department Production volume is measured by direct labor hours in this department and a flexible budget system is used to plan and control department overhead Standard costs for the special transformer are determined annually in September for the coming year The standard cost of a transformer was computed at $5700 as shown below

Direct materials Copper 3 spools $300 900

Direct labor 4 hours ( $700 2800 Variable Omiddoterhead 4 hours $300 1200 Fixed overhead 4 hours (jl $200

shy800

Total $5700

Ov ere based upon normal and expected monthly ca it b h of which were 4000 direct labor hours ractical capacity for this department i 5000 direct labor hours per mon ana Ie overhead costs are expected to vary with the num er 0 Irec a or 0

actually used During October([OO transformers were producdJThis was below expectations because a work stoppage occurred during contract negotiatio he I orce Once the contract was settled the wage rate was increased to 725hour and overtime as scheduled in an attempt to catch up to expected production levels The following costs were incurred in October

Direct Materials Copper purchased 2600 spools $308spool

Used 2600 spools Direct labor Regular time 2000 hours $700 Overtime 1400 hours $725

600 of the 1400 hours were subject to overtime premium The total overtime premium is included in variable overhead in accordance with company accounting practices

Overhead Variable $16670 Fixed $ 8800

Required Compute each of the following variances showing all your work Be sure to indicate whether the variances are favorable or unfavorable

3

a Direct materials price variance b Direct material efficiency (quantity) variance c Direct labor rate variance d Direct labor efficiency variance e Variable overhead spending variance f Variable overhead efficiency variance g Fixed overhead spending (budget) variance h Production volume variance

a $208 unfavorable b $300 favorable c $350 unfavorable d $1400 favorable e$6470 unfavorable f $600 favorable g $800 unfavorable h $800 unfavorable

Feedback a ($308 bull $300) x 2600 =$208 unfavorable b [2600 bull (3 x 900)] x $300 =$300 favorable c [($700 x 2000) + ($725 x 1400)] bull ($700 x 3400) =$350 unfavorable d [3400middot (4 x 900)] x $700 = $1400 favorable e $16670 bull ($300 x 3400) =$6470 unfavorable f ($300 x 3400) bull [$300 x (4 x 900)] =$600 favorable g $8800 bull ($200 x 4000) = $800 unfavorable h ($200 x 4000) bull [($200 x (4 x 900)] = $800 unfavorable

AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Medium Learning Objective 5 Learning Objective 6 Topic Area Variable Cost Variance Analysis Fixed Cost Variances

4

Variance Analysis Template

Standard Quantity Allowed for Actual

Actual Inputs at Output atStandard Actual Costs Standard Prices Price

AQ xAP AQxSP SQ x SP

) 7~ols X ~ 5~ho -

Cl(6D

Direct Materials 2bcro ls )(~3 crn4

~~ j

IL~ -=) t 76QJ shy

I $ l-oB a I I ~300 f I Price Variance Quantity Variance

AH x AR AH x SR qlJO 15 I SH x SR

z OW X ~ 7 J 2CJtsO)Xtf7 6D )( 4-tds l 7 ()t)Direct - hS (hY) Vf gtD k-~ 4T5D f- I ILabor

~~=3q-I5D~ ~) ~ or --------_ ~ I

350 a I I I 4-~ F I Rate Variance Efficiency Variance

AHxAR

Actual Flex Budget

L Lf-tnO lL ofp 1D l ~t ~ (51)____ L- Iyrt (

- $rC0)1l I $021 U I

Budget Variance

Variable Overhead

Fixed Overhead

a Direct materials price variance b Direct material efficiency (quantity) variance c Direct labor rate variance d Direct labor efficiency variance e Variable overhead spending variance f Variable overhead efficiency variance g Fixed overhead spending (budget) variance h Production volume variance

a $208 unfavorable b $300 favorable c $350 unfavorable d $1400 favorable e$6470 unfavorable f $600 favorable g $800 unfavorable h $800 unfavorable

Feedback a ($308 bull $300) x 2600 =$208 unfavorable b [2600 bull (3 x 900)] x $300 =$300 favorable c [($700 x 2000) + ($725 x 1400)] bull ($700 x 3400) =$350 unfavorable d [3400middot (4 x 900)] x $700 = $1400 favorable e $16670 bull ($300 x 3400) =$6470 unfavorable f ($300 x 3400) bull [$300 x (4 x 900)] =$600 favorable g $8800 bull ($200 x 4000) = $800 unfavorable h ($200 x 4000) bull [($200 x (4 x 900)] = $800 unfavorable

AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Medium Learning Objective 5 Learning Objective 6 Topic Area Variable Cost Variance Analysis Fixed Cost Variances

4

Variance Analysis Template

Standard Quantity Allowed for Actual

Actual Inputs at Output atStandard Actual Costs Standard Prices Price

AQ xAP AQxSP SQ x SP

) 7~ols X ~ 5~ho -

Cl(6D

Direct Materials 2bcro ls )(~3 crn4

~~ j

IL~ -=) t 76QJ shy

I $ l-oB a I I ~300 f I Price Variance Quantity Variance

AH x AR AH x SR qlJO 15 I SH x SR

z OW X ~ 7 J 2CJtsO)Xtf7 6D )( 4-tds l 7 ()t)Direct - hS (hY) Vf gtD k-~ 4T5D f- I ILabor

~~=3q-I5D~ ~) ~ or --------_ ~ I

350 a I I I 4-~ F I Rate Variance Efficiency Variance

AHxAR

Actual Flex Budget

L Lf-tnO lL ofp 1D l ~t ~ (51)____ L- Iyrt (

- $rC0)1l I $021 U I

Budget Variance

Variable Overhead

Fixed Overhead

Variance Analysis Template

Standard Quantity Allowed for Actual

Actual Inputs at Output atStandard Actual Costs Standard Prices Price

AQ xAP AQxSP SQ x SP

) 7~ols X ~ 5~ho -

Cl(6D

Direct Materials 2bcro ls )(~3 crn4

~~ j

IL~ -=) t 76QJ shy

I $ l-oB a I I ~300 f I Price Variance Quantity Variance

AH x AR AH x SR qlJO 15 I SH x SR

z OW X ~ 7 J 2CJtsO)Xtf7 6D )( 4-tds l 7 ()t)Direct - hS (hY) Vf gtD k-~ 4T5D f- I ILabor

~~=3q-I5D~ ~) ~ or --------_ ~ I

350 a I I I 4-~ F I Rate Variance Efficiency Variance

AHxAR

Actual Flex Budget

L Lf-tnO lL ofp 1D l ~t ~ (51)____ L- Iyrt (

- $rC0)1l I $021 U I

Budget Variance

Variable Overhead

Fixed Overhead

( c )

Flexible Sales Actual Budget Flexible Activity Master

-SJ Results Variance Budget Variance Budget Units ~ 13 000 ~2f 2000 U k~a Sales revenue r~~ ~l -JG) 13000F~5fD~ gq--o-oOlf(j) Less ltVariable mfg Costsgt $87750 32S0 F $91000 (~ ooof $105000 ltVariable mktgladm costsgt ti-( l-50 )J) $3250U 2b1ooo D $4OOOF 30000 __3 ContnbutlOn margm $ 52000 p~ 01)() treg $6000U )()~ shy

d-sb

54 What is the actual sales revenue A $156000 B $169000 C $180000 D $191000

First solve for actual variable marketing amp administrative costs =$29250 Second add actual contribution margin to the actual variable costs to find actual sales = $169000

AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance

6

55 What is the sales revenue in the flexible budget A $139000 B $156000 C $169000 D $180000

$169000 (actual sales from previous question) bull $13000 =$156000

AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance

56 What is the flexible budget contribution margin A $39000 B $45000 C $52000 D $58000

$156000 bull $91000 bull $26000 =$39000

AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance

7

57 What is the master budget sales revenue A $124000 B $148000 C $156000 D $180000

($15600013000) =$12 selling price $12 x (13000 +2000) =$180000

AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance

58 What is the master budget contribution margin A $52000 B $47500 C $45000 D $39000

$180000 - $105000 - $30000 =$45000

AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Varianc

8

The following information summarizes the standard cost for producing one metal tennis racket frame In addition the variances for one months production are given Assume that all inventory accounts have zero balances at the beginning of the month

Materials Direct Labor 2 hrs $260 Factory Overhead VariabJe Fixed

Variances Material price Material quantity Labor rate Labor efficiency

Standard Cost Per Unit

$ 400 520

180 500

$1600

Standard Jvfonthlv Costs

$ 8400 10920

3780 10500

$33600

24475 Wlfavorab1e 50000 Wlfavorable 52000 favorable 208000 Wlfavorable

69 What were the actual direct labor hours worked during the month A5OOO B4800 C4200 D4OOO E3400

Number of units = $336001600 = 2100 [AHmiddot (2100 x 2)] x $260 = $2080 U AH = 5000

AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 5 Topic Area Direct Labor

9

55 What is the sales revenue in the flexible budget A $139000 B $156000 C $169000 D $180000

$169000 (actual sales from previous question) bull $13000 =$156000

AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance

56 What is the flexible budget contribution margin A $39000 B $45000 C $52000 D $58000

$156000 bull $91000 bull $26000 =$39000

AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance

7

57 What is the master budget sales revenue A $124000 B $148000 C $156000 D $180000

($15600013000) =$12 selling price $12 x (13000 +2000) =$180000

AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance

58 What is the master budget contribution margin A $52000 B $47500 C $45000 D $39000

$180000 - $105000 - $30000 =$45000

AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Varianc

8

The following information summarizes the standard cost for producing one metal tennis racket frame In addition the variances for one months production are given Assume that all inventory accounts have zero balances at the beginning of the month

Materials Direct Labor 2 hrs $260 Factory Overhead VariabJe Fixed

Variances Material price Material quantity Labor rate Labor efficiency

Standard Cost Per Unit

$ 400 520

180 500

$1600

Standard Jvfonthlv Costs

$ 8400 10920

3780 10500

$33600

24475 Wlfavorab1e 50000 Wlfavorable 52000 favorable 208000 Wlfavorable

69 What were the actual direct labor hours worked during the month A5OOO B4800 C4200 D4OOO E3400

Number of units = $336001600 = 2100 [AHmiddot (2100 x 2)] x $260 = $2080 U AH = 5000

AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 5 Topic Area Direct Labor

9

57 What is the master budget sales revenue A $124000 B $148000 C $156000 D $180000

($15600013000) =$12 selling price $12 x (13000 +2000) =$180000

AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance

58 What is the master budget contribution margin A $52000 B $47500 C $45000 D $39000

$180000 - $105000 - $30000 =$45000

AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Varianc

8

The following information summarizes the standard cost for producing one metal tennis racket frame In addition the variances for one months production are given Assume that all inventory accounts have zero balances at the beginning of the month

Materials Direct Labor 2 hrs $260 Factory Overhead VariabJe Fixed

Variances Material price Material quantity Labor rate Labor efficiency

Standard Cost Per Unit

$ 400 520

180 500

$1600

Standard Jvfonthlv Costs

$ 8400 10920

3780 10500

$33600

24475 Wlfavorab1e 50000 Wlfavorable 52000 favorable 208000 Wlfavorable

69 What were the actual direct labor hours worked during the month A5OOO B4800 C4200 D4OOO E3400

Number of units = $336001600 = 2100 [AHmiddot (2100 x 2)] x $260 = $2080 U AH = 5000

AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 5 Topic Area Direct Labor

9

The following information summarizes the standard cost for producing one metal tennis racket frame In addition the variances for one months production are given Assume that all inventory accounts have zero balances at the beginning of the month

Materials Direct Labor 2 hrs $260 Factory Overhead VariabJe Fixed

Variances Material price Material quantity Labor rate Labor efficiency

Standard Cost Per Unit

$ 400 520

180 500

$1600

Standard Jvfonthlv Costs

$ 8400 10920

3780 10500

$33600

24475 Wlfavorab1e 50000 Wlfavorable 52000 favorable 208000 Wlfavorable

69 What were the actual direct labor hours worked during the month A5OOO B4800 C4200 D4OOO E3400

Number of units = $336001600 = 2100 [AHmiddot (2100 x 2)] x $260 = $2080 U AH = 5000

AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 5 Topic Area Direct Labor

9

70 What were the actual quantity of materials used during the month A2156 B2100

~2225) Of975

($400 x AQ) - (2100 x $400 =$500 U AQ =2225

AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 5 Topic Area Direct Materials

71 What was the actual price paid for the direct material during the month assuming a materials purchased were put into production A $434

(AP - $400) 2225 =$24475U AP =$411 (rounded)

AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 5 Topic Area Direct Materials

10

Variance Analysis Template

[ltf(1- 71 I Me+A Tenlls f0-J4f Fr~

Direct Materials

Direct Labor

Variable Overhead

Fixed Overhead

Standard Quantity Allowed for Actual

Actual Inputs at Output at Standard Actual Costs Standard Prices Price

AQxAP AQ x SP SQ x SP

r~ X $tfshyo l [F~ril -flj-

Lshy I

L- J f ~I tf-(S1)

skh ~ -LLsed

~ I z

~t1

t ~ li- I t -s=e e bI I pric ~riance Quantity Variance

AH xAR AHxSR J - J SHxSR

l x[ ~u ] Y- 2nr~ 1 cent ~ ~ 2boCJ~CJ

~~ r __t r I r ~OI 1~ I ~tZ euro I ti le ~e fiI I

Rate Variance Efficiency Variance AHxAR AH x SR I SH x SR

K ~ rO L I

f37lD

Actual

I Spending Variance

I Flex Budget

I I Efficiency Variance

Applied

)( It cro

L I

1 10 5OU

I Budget Variance

I I Volume Variance

I

reg

Variance Analysis Template

Standard Quantity Allowed for Actual

ActualCpound -Alt~=~Eat Output at Standard Standar es Price

AQ gt(AJiI rEil AQ J6SPj SQ x SP

CTI r2ou ~~~xC4i II =Jx $1shy

I I I l-shy J purVutsed 1 ( ~lt-6D

Direct C 1Materials - shy - - -shy- - --shy- ~ )lt l --~h l

0 I

~eJ l )q5b _~ ~ (AP _sCf-) ll3-S

~ Jyy IS U I SOC u I

Price Variance Quantity Variance AHxAR AH xSR I t 1-1 ere 1 SH x SR

[l~o] [ rx l-2 bO 1 2klSl21)~ ~1 gtlt )L -Direct --Ij-~ tlfgtO ~-

x Labor ( l--shy j

shy J

fi~1 fruJ lt31 61SU ] ~O 11-0 l I - F I I 2 o iO 4 Igt_Jo

Rate Variance Efficiency Variance AH xAR AH x SR I SH x SR

Variable Overhead

I I I I Spending Variance Efficiency Variance

Actual Flex Budget Applied

Fixed Overhead

I I I I Budget Variance Volume Variance

Variance Analysis Template

Direct Materials

Direct Labor

Variable Overhead

Fixed Overhead

Standard Quantity Allowed for Actual

Actual Inputs at Output at Standard Actual Costs Standard Prices Price

AQxAP AQxSP SQ x SP

I I I I Price Variance Quantity Variance

SH x SR AH xAR I AH x SR

I I I I Rate Variance Efficiency Variance

I SH x SR AHxAR I AH x SR

I I I I Spending Variance Efficiency Variance

Flex Budget I I AppliedActual

I I I I Budget Variance Volume Variance

Variance Analysis Template

Direct Materials

Direct Labor

Variable Overhead

Fixed Overhead

Standard Quantity Allowed for Actual

Actual Inputs at Output at Standard Actual Costs Standard Prices Price

AQxAP AQ xSP SQ x SP

AH xAR

I Price Variance

I AH x SR

I I

Quantity Variance I l SH x SR

AHxAR

I Rate Variance

I AH x SR

I Efficiency Variance

I SH x SR

Actual

I Spending Variance

I l Flex Budget

I Efficiency Variance

I Applied

I Budget Variance

I I Volume Variance

I

Variance Analysis Template

[ltf(1- 71 I Me+A Tenlls f0-J4f Fr~

Direct Materials

Direct Labor

Variable Overhead

Fixed Overhead

Standard Quantity Allowed for Actual

Actual Inputs at Output at Standard Actual Costs Standard Prices Price

AQxAP AQ x SP SQ x SP

r~ X $tfshyo l [F~ril -flj-

Lshy I

L- J f ~I tf-(S1)

skh ~ -LLsed

~ I z

~t1

t ~ li- I t -s=e e bI I pric ~riance Quantity Variance

AH xAR AHxSR J - J SHxSR

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Fixed Overhead

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Variance Analysis Template

Direct Materials

Direct Labor

Variable Overhead

Fixed Overhead

Standard Quantity Allowed for Actual

Actual Inputs at Output at Standard Actual Costs Standard Prices Price

AQxAP AQxSP SQ x SP

I I I I Price Variance Quantity Variance

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I I I I Rate Variance Efficiency Variance

I SH x SR AHxAR I AH x SR

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I I I I Budget Variance Volume Variance

Variance Analysis Template

Direct Materials

Direct Labor

Variable Overhead

Fixed Overhead

Standard Quantity Allowed for Actual

Actual Inputs at Output at Standard Actual Costs Standard Prices Price

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Variance Analysis Template

Standard Quantity Allowed for Actual

ActualCpound -Alt~=~Eat Output at Standard Standar es Price

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Variable Overhead

I I I I Spending Variance Efficiency Variance

Actual Flex Budget Applied

Fixed Overhead

I I I I Budget Variance Volume Variance

Variance Analysis Template

Direct Materials

Direct Labor

Variable Overhead

Fixed Overhead

Standard Quantity Allowed for Actual

Actual Inputs at Output at Standard Actual Costs Standard Prices Price

AQxAP AQxSP SQ x SP

I I I I Price Variance Quantity Variance

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I I I I Rate Variance Efficiency Variance

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Flex Budget I I AppliedActual

I I I I Budget Variance Volume Variance

Variance Analysis Template

Direct Materials

Direct Labor

Variable Overhead

Fixed Overhead

Standard Quantity Allowed for Actual

Actual Inputs at Output at Standard Actual Costs Standard Prices Price

AQxAP AQ xSP SQ x SP

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Variance Analysis Template

Direct Materials

Direct Labor

Variable Overhead

Fixed Overhead

Standard Quantity Allowed for Actual

Actual Inputs at Output at Standard Actual Costs Standard Prices Price

AQxAP AQxSP SQ x SP

I I I I Price Variance Quantity Variance

SH x SR AH xAR I AH x SR

I I I I Rate Variance Efficiency Variance

I SH x SR AHxAR I AH x SR

I I I I Spending Variance Efficiency Variance

Flex Budget I I AppliedActual

I I I I Budget Variance Volume Variance

Variance Analysis Template

Direct Materials

Direct Labor

Variable Overhead

Fixed Overhead

Standard Quantity Allowed for Actual

Actual Inputs at Output at Standard Actual Costs Standard Prices Price

AQxAP AQ xSP SQ x SP

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I Price Variance

I AH x SR

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Quantity Variance I l SH x SR

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Actual

I Spending Variance

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I Budget Variance

I I Volume Variance

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Variance Analysis Template

Direct Materials

Direct Labor

Variable Overhead

Fixed Overhead

Standard Quantity Allowed for Actual

Actual Inputs at Output at Standard Actual Costs Standard Prices Price

AQxAP AQ xSP SQ x SP

AH xAR

I Price Variance

I AH x SR

I I

Quantity Variance I l SH x SR

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I Rate Variance

I AH x SR

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I SH x SR

Actual

I Spending Variance

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I Budget Variance

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