1.) Logistics Solutions provides order fulfillment services for dot.com merchants. The company maintains warehouses that stock items carried by its dot.com clients. When a client receives an order from a customer, the order is forwarded to Logistics Solutions, which pulls the item from storage, packs it, and ships it to the customer. The company uses a predetermined variable overhead rate based on direct labor-hours.

In the most recent month, 135,000 items were shipped to customers using 5,000 direct labor-hours. The company incurred a total of $14,750 in variable overhead costs.

According to the companys standards, 0.04 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is $3.00 per direct labor-hour.

Required:

1. What is the standard labor-hours allowed (SH) to ship 135,000 items to customers?

2. What is the standard variable overhead cost allowed (SH SR) to ship 135,000 items to customers?

3. What is the variable overhead spending variance?

4. What is the variable overhead rate variance and the variable overhead efficiency variance?

(For requirements 3 and 4, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.)

2.) Dawson Toys, Ltd., produces a toy called the Maze. The company has recently created a standard cost system to help control costs and has established the following standards for the Maze toy:

Direct materials: 8 microns per toy at $0.32 per micron

Direct labor: 1.2 hours per toy at $6.70 per hour

During July, the company produced 5,100 Maze toys. The toy's production data for the month are as follows:

Direct materials: 79,000 microns were purchased at a cost of $0.29 per micron. 28,000 of these microns were still in inventory at the end of the month.

Direct labor: 6,520 direct labor-hours were worked at a cost of $46,292.

Required:

1. Compute the following variances for July: (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations. Round final answer to the nearest whole dollar amount.)

a. The materials price and quantity variances.

b. The labor rate and efficiency variances.

3.) Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows:

	Standard Quantity or Hours		Standard Price or Rate			Standard Cost
Direct materials	2.00	ounces	$	21.00	per ounce	$	42.00
Direct labor	0.90	hours	$	12.00	per hour		10.80
Variable manufacturing overhead	0.90	hours	$	2.00	per hour		1.80
Total standard cost per unit						$	54.60

During November, the following activity was recorded related to the production of Fludex:

1. Materials purchased, 10,000 ounces at a cost of $197,000.

2. There was no beginning inventory of materials; however, at the end of the month, 2,550 ounces of material remained in ending inventory.

3. The company employs 24 lab technicians to work on the production of Fludex. During November, they each worked an average of 170 hours at an average pay rate of $11.50 per hour.

4. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $4,800.

5. During November, the company produced 3,700 units of Fludex.

Required:

1. For direct materials:

a. Compute the price and quantity variances.

b. The materials were purchased from a new supplier who is anxious to enter into a long-term purchase contract. Would you recommend that the company sign the contract?

2. For direct labor:

a. Compute the rate and efficiency variances.

b. In the past, the 24 technicians employed in the production of Fludex consisted of 6 senior technicians and 18 assistants. During November, the company experimented with fewer senior technicians and more assistants in order to reduce labor costs. Would you recommend that the new labor mix be continued?

3. Compute the variable overhead rate and efficiency variances.

4.) Lane Company manufactures a single product that requires a great deal of hand labor. Overhead cost is applied on the basis of standard direct labor-hours. The budgeted variable manufacturing overhead is $5.80 per direct labor-hour and the budgeted fixed manufacturing overhead is $3,087,000 per year.

The standard quantity of materials is 4 pounds per unit and the standard cost is $12.50 per pound. The standard direct labor-hours per unit is 1.5 hours and the standard labor rate is $13.90 per hour.

The company planned to operate at a denominator activity level of 315,000 direct labor-hours and to produce 210,000 units of product during the most recent year. Actual activity and costs for the year were as follows:

Actual number of units produced		252,000
Actual direct labor-hours worked		409,500
Actual variable manufacturing overhead cost incurred	$	1,351,350
Actual fixed manufacturing overhead cost incurred	$	3,276,000

Required:

1. Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed elements.

2. Prepare a standard cost card for the companys product.

3a. Compute the standard direct labor-hours allowed for the years production.

3b. Complete the following Manufacturing Overhead T-account for the year.

4. Determine the reason for any underapplied or overapplied overhead for the year by computing the variable overhead rate and efficiency variances and the fixed overhead budget and volume variances.

5.) Bowen Company manufactures one product, it does not maintain any beginning or ending inventories, and its uses a standard cost system. Its predetermined overhead rate includes $1,000,000 of fixed overhead in the numerator and 50,000 direct labor-hours in the denominator. The company purchased (with cash) and used 34,000 yards of raw materials at a cost of $10.10 per yard. Its direct laborers worked 20,150 hours and were paid a total of $290,300. The company started and completed 8,400 units of finished goods during the period. Bowens standard cost card for its only product is as follows:

Inputs	(1) Standard Quantity or Hours		(2) Standard Price or Rate			Standard Cost (1) (2)
Direct materials	3.3	yards	$	11.50	per yard	$	37.95
Direct labor	2.7	hours	$	14.00	per hour		37.80
Fixed manufacturing overhead	2.7	hours	$	20.00	per hour		54.00
Total standard cost per unit						$	129.75

Required:

1. When recording the raw material purchases:

a. The Raw Materials inventory will increase (decrease) by how much?

b. The Cash will increase (decrease) by how much?

2. When recording the raw materials used in production:

a. The Raw Materials inventory will increase (decrease) by how much?

b. The Work in Process inventory will increase (decrease) by how much?

3. When recording the direct labor costs added to production:

a. The Work in Process inventory will increase (decrease) by how much?

b. The Cash will increase (decrease) by how much?

4. When applying fixed manufacturing overhead to production, the Work in Process inventory will increase (decrease) by how much?

5. When transferring manufacturing costs from Work in Process to Finished Goods, the Finished Goods inventory will increase (decrease) by how much?

6.) Wallis Company manufactures only one product and uses a standard cost system. The company uses a predetermined plantwide overhead rate that relies on direct labor-hours as the allocation base. All of the company's manufacturing overhead costs are fixedit does not incur any variable manufacturing overhead costs. The predetermined overhead rate is based on a cost formula that estimated $2,899,000 of fixed manufacturing overhead for an estimated allocation base of 289,900 direct labor-hours. Wallis does not maintain any beginning or ending work in process inventory.

The companys beginning balance sheet is as follows:

Wallis Company
Balance Sheet
1/1/XX
(dollars in thousands)
Assets
Cash	$	850
Raw materials inventory		300
Finished goods inventory		420
Property, plant, and equipment, net		10,000
Total assets	$	11,570
Liabilities and Equity
Retained earnings	$	11,570
Total liabilities and equity	$	11,570

The companys standard cost card for its only product is as follows:

Inputs	(1) Standard Quantity or Hours	(2) Standard Price or Rate			Standard Cost (1) (2)
Direct materials	2 pounds	$	33.00	per pound	$	66.00
Direct labor	3.00 hours	$	15.00	per hour		45.00
Fixed manufacturing overhead	3.00 hours	$	10.00	per hour		30.00
Total standard cost per unit					$	141.00

During the year Wallis completed the following transactions:

1. Purchased (with cash) 237,500 pounds of raw material at a price of $31.00 per pound.
2. Added 218,750 pounds of raw material to work in process to produce 96,500 units.
3. Assigned direct labor costs to work in process. The direct laborers (who were paid in cash) worked 248,000 hours at an average cost of $16.00 per hour to manufacture 96,500 units.
4. Applied fixed overhead to work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed to manufacture 96,500 units. Actual fixed overhead costs for the year were $2,747,500. Of this total, $1,355,000 related to items such as insurance, utilities, and salaried indirect laborers that were all paid in cash and $1,392,500 related to depreciation of equipment.
5. Transferred 96,500 units from work in process to finished goods.
6. Sold (for cash) 93,500 units to customers at a price of $170 per unit.
7. Transferred the standard cost associated with the 93,500 units sold from finished goods to cost of goods sold.
8. Paid $2,127,500 of selling and administrative expenses.
9. Closed all standard cost variances to cost of goods sold.

Required:

1. Compute all direct materials, direct labor, and fixed overhead variances for the year.

2. Record transactions a through i for Wallis Company.

3. Compute the ending balances for Wallis Companys balance sheet.

4. Prepare Wallis Companys income statement for the year.