efficiency variance given above. Data P10-1: Part II Maple Products, Ltd. Manufa
ID: 2471323 • Letter: E
Question
efficiency variance given above.
Data P10-1: Part II Maple Products, Ltd. Manufactures a super-strong hockey stick. Standard costs for one hockey stick follow: MAPLE PRODUCTS, LTD. Std Quantity Std Price Totals Standard cost of one unit: or Hours or Rate Direct materials ? ft @ $3.00 ? Direct labor 2 hr @ ? ? Variable manufacturing overhead ? hr @ $1.30 ? Total standard variable cost per unit $27.00 Units produced and sold last year 8,000 Selected cost data related to last year's operations: Dr. Cr. Accounts payable, material purchased (60,000 ft.) $174,000 Wages Payable (? Hours)* $79,200 Work in process-direct materials $115,200 Direct labor rate variance $3,300 Variable overhead efficiency variance $650 Variable manufactured OH cost incurred last year $19,800 Direct materials usage in excess of standard 0.20 per stick * Relates to the actual direct labor cost for the year. The following additional information is available for last year's operations: a. No materials were on hand at the start of last year. Some of the materials purchased during the year were still on hand in the warehouse at the end of the year. b. The variable manufacturing overhead rate is based on direct labor-hours. Total actual variable overhead cost for last year was $19,800. c. Actual direct materials usage for last year exceeded the standard by 0.2 feet per stick. Required: 1. For direct materials: a. Compute the price and quantity variances for last year. b. Prepare journal entries to record all activities relating to direct materials for last year. 2. For direct labor: a. Verify the rate variance given above and compute the efficiency variance for last year. b. Prepare a journal entry to record activity relating to direct labor for last year. 3. Compute the variable overhead spending variance for last year and verify the variable overheadefficiency variance given above.
Explanation / Answer
Selected cost data related to last year's operations: Dr. Cr. Work in process-direct materials $ 115,200 Accounts payable, material purchased (60,000 ft.) $ 174,000 Variable overhead efficiency variance $ 650 Variable manufactured OH cost incurred last year $ 19,800 Direct labor rate variance $ 3,300 Wages Payable (? Hours)* $ 79,200 Std Quantity Std Price Totals Standard cost of one unit: or Hours or Rate Direct materials 4.8 ft @ $ 3.00 $ 14.40 Direct labor 2 hr @ $ 5.00 $ 10.00 Variable manufacturing overhead 2 hr @ $ 1.30 $ 2.60 Total standard variable cost per unit $ 27.00 Actual cost of one unit: Direct materials 5 ft @ $ 2.90 $ 14.50 Direct labor 2.0625 hr @ $ 4.80 $ 9.90 Variable manufacturing overhead 2.0625 hr @ $ 1.20 $ 2.48 Variance Calculations: Price/rate Qty/Efficiency Direct materials 3840 F 4800 U Direct labor 3300 F 2500 U Variable manufacturing overhead 1650 F 650 U Units produced and sold last year 8,000 Material Price Variance = SQ*(SP-AP) x 8000 4.8(3-2.90)*8000 = 3840 Material Qty Variance = SP*(SQ-AQ) x 8000 3(4.8-5)*8000 = 4800 Labour Rate Variance = AH*(SR-AR) x 8000 2.0625(5-4.8)*8000 = 3300 Labour Efficiency Variance = SR*(SH-AH) x 8000 5(2-2.0625)*8000 = 2500 Variable O/H Spending Variance = AH*(SR-AR) x 8000 2.0625(1.3-1.2)*8000 = 1650 Variable O/H Efficiency Variance = SR*(SH-AH) x 8000 1.3(2-2.0625)*8000 = 650 Direct Materials $ 180,000 Direct Material Price Variance 6000 Accounts payable, material purchased (60,000 ft.) $ 174,000 Work in process-direct materials $ 115,200 Direct Material Quantity Variance $ 4,800 120000 Work in process-Direct Labour 80000 Direct Labor Efficiency Variance 2500 Direct Labor Rate Variance 3300 Wages Payable (16500 Hours)* 79200 Work in process-VMOH 20800 Variable O/H Spending Variance 650 Variable O/H Efficiency Variance 1650 VMOH Cost 19800
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