Fle Edt View History Bookmarks Develop Window Help hapter 10 Homework 6 Help Sa
ID: 2566682 • Letter: F
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Fle Edt View History Bookmarks Develop Window Help hapter 10 Homework 6 Help Sa Miller Toy Company manufactures a plastic swimming pool at its Westwood Pliant. The plant has been experiencing problems as shown by its June contribution format income statement below Dodget Act al Sales (4,0D0 poola) Variable expenses 275-900 275,900 4,720 90,940 variable cost ot goods sold Variable seiling expesses Total vari 173 280 157 960 6,000 ,00D 3,009 93,000 uring overhead and selling adalaist r-tive 1 fixed expenses Net ogerating ineone (loss "Contains direct materials, direct labor and variable manufacturing overhead Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to "get things under control Upon reviewing the plant's income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool: Quastity or Btandard Price Standard 4.3 pounds 0.6 hours 0.3 hours. 2.90 per pound 8.40 per hour 3.50 per hour $12.47 Variable manufeoturing overhead -11)- 18-68 "Based on machine-hours. During June, the plant produced 4,000 pools and incurred the following costs: 8Explanation / Answer
Material price variance AP (a) SP (b) Variance (c=b-a) AQ (d) Total variance (e=c*d) F/U Material price variance = (AP-SP)*AQ AP = Actual price per unit = $3.35 SP = Standard price per unit = $2.90 AQ = Actual quantity consumed= 17,000 F= Favourable U = Unfavourable Material price variance AP (a) SP (b) Variance (c=b-a) AQ (d) Total variance (e=c*d) F/U $ 3.35 $ 2.90 -0.45 17,000 -7,650 U Material quantity variance AQ (a) SQ (b) Variance (c=b-a) SP (d) Total variance (e=c*d) F/U Material quantity variance = (AQ-SQ)*SP AQ = Actual quantity consumed= 17,000 SQ = Standard quantity = 4,000 * 4.3 = 17,200 SP = Standard price per unit = $2.90 F= Favourable U = Unfavourable Material quantity variance AQ (a) SQ (b) Variance (c=b-a) SP (d) Total variance (e=c*d) F/U 17,000 17,200 200 $ 2.90 580 F Total Material variance Total Actual Total Std Total variance F/U 56,950 49,880 -7,070 U (17,000 * $3.35) (17,200 * $2.90) Labor Rate variance AR (a) SR (b) Variance (c=b-a) AH (d) Total variance (e=c*d) F/U Labor Rate variance = (AR-SR)*AH AR = Actual Rate per hour = $8.30 SR = Standard Rate per hour = $8.40 AH = Actual hours = 3,000 F= Favourable U = Unfavourable Labor Rate variance AR (a) SR (b) Variance (c=b-a) AH (d) Total variance (e=c*d) F/U $ 8.30 $ 8.40 0.10 3000 300 F Labor Efficiency variance AH (a) SH (b) Variance (c=b-a) AR (d) Total variance (e=c*d) F/U Labor Efficiency variance = (AH-SH)*AR AH = Actual hours = 3,000 SH = Standard Hours = 4,000*.06 = 2,400 SR = Standard Rate per hour = $8.40 F= Favourable U = Unfavourable Labor Efficiency variance AH (a) SH (b) Variance (c=b-a) SR (d) Total variance (e=c*d) F/U 3,000 2,400 -600 $ 8.40 -5,040 U Total Labor variance Total Actual Total Std Total variance F/U 24,900 20,160 -4,740 U (3,000 * $8.30) (2,400 * $8.40) VOH spending (rate) variance AR (a) SR (b) Variance (c=b-a) AH (d) Total variance (e=c*d) F/U VOH spending variance = (AR-SR)*AH AR = Actual Rate per hour = $6,450 / 1,500 = $4.30 SR = Standard Rate per hour = $3.90 AH = Actual hours = 1,500 F= Favourable U = Unfavourable VOH spending (rate) variance AR (a) SR (b) Variance (c=b-a) AH (d) Total variance (e=c*d) F/U $ 4.30 $ 3.90 -0.4 1500 -600 U VOH efficiency variance AH (a) SH (b) Variance (c=b-a) SR (d) Total variance (e=c*d) F/U VOH efficiency variance = (AH-SH)*SR AH = Actual hours = 1,500 SH = Standard Hours = 4,000 * 0.3 = 1,200 SR = Standard Rate per hour = $3.90 F= Favourable U = Unfavourable VOH efficiency variance AH (a) SH (b) Variance (c=b-a) Price (d) Total variance (e=c*d) F/U 1,500 1,200 -300 $ 3.90 -1,170 U Total VOH variance Total Actual Total Std Total variance F/U 6,450 4,680 -1,770 U (1,500 * $4.30) (1,200 * $3.90) Net variance Total Actual (a) Total Std (b) Net variance (c=b-a) F/U Total Actual = Total Material Actual + Total Labor Actual + Total VOH Actual Total Actual = 56,950 + 24,900 + 6,450 Total Std = Total Material Std + Total Labor Std + Total VOH Std Total Std = 49,880 + 20,160 + 4,680 Net variance Total Actual (a) Total Std (b) Net variance (c=b-a) F/U 88,300 74,720 -13,580 U
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