Exercise 23-14 Picard Landscaping plants grass seed as the basic landscaping for

Question

Exercise 23-14

Picard Landscaping plants grass seed as the basic landscaping for business campuses. During a recent month, the company worked on three projects (Remington, Chang, and Wyco). The company is interested in controlling the materials costs, namely the grass seed, for these plantings projects.

In order to provide management with useful cost control information, the company uses standard costs and prepares monthly variance reports. Analysis reveals that the purchasing agent mistakenly purchased poor-quality seed for the Remington project. The Chang project, however, received higher-than-standard-quality seed that was on sale. The Wyco project received standard-quality seed. However, the price had increased and a new employee was used to spread the seed.

Shown below are quantity and cost data for each project.

Actual

Standard

(a)

Prepare a variance report for the purchasing department. (Round actual and standard price per pound answers to 2 decimal places e.g. 1.25.)

PICARD LANDSCAPING
Variance Report – Purchasing Department
For the Current Month

Project

Actual
Pounds
Purchased

Actual
Price Per
Pound

Standard
Price Per
Pound

Price
Variance

(b)

Prepare a variance report for the production department. (Round standard price per pound to 2 decimal places, e.g. 1.25.)

PICARD LANDSCAPING
Variance Report – Production Department
For the Current Month

Project

Actual
Pounds

Standard
Pounds

Standard
Price Per
Pound

Quantity
Variance

Actual

Standard

Project Quantity Costs Quantity Costs Total Variance Remington 530 lbs. $1,272 460 lbs. $1,196 $76 U Chang 400 880 410 1,066 186 F Wyco 650 1,755 540 1,404 351 U     Total variance $241 U

Explanation / Answer

PICARD LANDSCAPING Variance Report- Purchasing Department For the Current Month Project Actual Pond Purchased Actual price/Pond Standard price/Pond Price Variance Remigton 530 lbs $2.40 $2.60 ($2.6-$2.40)530= $106 Favourable Chang 400 lbs $2.20 $2.60 ($2.6-$2.20)400=$160 Favourable Wyco 650 lbs $2.70 $2.60 ($2.6-$2.70)650=-$65 Un Favourable PICARD LANDSCAPING Variance Report- Production Department For the Current Month Project Actual Pond Standard Pond Standard price/Pond Quantity Variance Remigton 530 lbs 460 lbs $2.60 (460-530)$2.6= -$182 UnFavourable Chang 400 lbs 410 lbs $2.60 (410-400)$2.6=$26 Favourable Wyco 650 lbs 540 lbs $2.60 (540-650)$2.6=-$286 UnFavourable

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