8. CEx.10-23

Materials Variances Lata Inc. produces aluminum cans. Production of 12ounce cans has a standard unit quantity of 4.5 ounces of aluminum per can. During the month of April, 300,000 cans were produced using

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1,250,000 ounces of aluminum. The actual cost of aluminum was $0.09 per ounce and the standard price was $0.08 per ounce. There are no beginning or ending inventories of aluminum.

Required:

Calculate the materials price and usage variances using the columnar and formula approaches.

Materials Price Variance $ Material Usage Variance $

9. Ex.10-28

Budget Variances, Materials and Labor Cinturon Corporation produces highquality leather belts. The company's plant in Boise uses a standard costing system and has set the following standards for materials and labor:

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Leather (3 strips @ $4) Direct labor (0.75 hr. @ $12) Total prime cost

$12.00 9.00 $21.00

During the first month of the year, Boise plant produced 92,000 belts. Actual leather purchased was 287,500 strips at $3.60 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 78,200 hours at $12.50 per hour.

Required: 1. Compute the costs of leather and direct labor that should be incurred for the production of 92,000 leather belts.

Cost of materials $ Cost of direct labor $

2. Compute the total budget variances for materials and labor. Total Budget Variance

Materials $ Labor $

3. Conceptual Connection: Would you consider these variances material with a need for investigation?

10. Ex.10-33

Materials and Labor Variances At the beginning of the year, Shults Company had the following standard cost sheet for one of its plastic products:

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Direct materials (6 lbs. @ $5) Direct labor (2 hrs. @ $12) Standard prime cost per unit

The actual results for the year are as follows:

$30.00 24.00 $54.00

a. Units produced: 350,000. b. Materials purchased: 1,860,000 pounds @ $5.10. c. Materials used: 1,850,000 pounds. d. Direct labor: 725,000 hours @ $11.85.

Required: 1. Compute price and usage variances for materials.

Material price variance $ Material usage variance $

2. Compute the labor rate and labor efficiency variances.

Labor rate variance $ Labor efficiency variance $

11. Ex.10-35

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Materials and Labor Variances

Deporte Company produces singlecolored tshirts. Materials for the shirts are dyed in large vats. After dying the materials for a given color, the vats must be cleaned and prepared for the next batch of materials to be colored. The following standards for changeover for a given batch have been established:

Direct materials (2.4 lbs. @ $0.95) Direct labor (0.75 hr. @ $7.40) Standard prime cost

$2.28 5.55 $7.83

During the year, 79,500 pounds of material were purchased and used for the changeover activity. There were 30,000 batches produced, with the following actual prime costs:

Direct materials $ 63,000 Direct labor $163,385 (for 22,450 hrs.)

Required:

Compute the materials and labor variances associated with the changeover activity, labeling each variance as favorable or unfavorable.

Material Variances

Price variance $ Usage variance $ Labor Variances Rate variance $ Efficiency variance $

12. Ex.10-36

(Appendix 10A) Journal Entries

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