Anders Painting Service specializes in painting tall office buildings. During a recent month, the company worked on three painting projects (the Arrow Building, the Besler Building and the Cartrwright Building). The company is interested in controlling the materials costs, namely the paint, used for these painting contracts.

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 paint for the Arrow Building project. The Besler Building project, however, received higher-than-standard-quality paint that was on sale. The Cartwright Building project received standard-quality paint. However, the price had increased and a new employee was used to paint the building.

Shown below are quantity and cost data for each project.

Actual ___ Standard Total

Project Quantity Costs Quantity Costs Variance

Arrow Building 3,750 gallons $285,000 3,500 gallons $280,000 $ 5,000 U

Besler Building 3,800 $296,400 4,000 $320,000 23,600 F

Cartwright Building 4,500 $369,000 4,200 $336,000 33,000 U

Total variance $14,400 U

Instructions

(a) Prepare a variance report for the purchasing department with the following columns:

(1) Project

(2) Actual Gallons Purchased

(3) Actual Price

(4) Standard Price

(5) Price Variance

(6) Explanation

(b) Prepare a variance report for the production department with the following columns:

(1) Project

(2) Actual Gallons

(3) Standard Gallons

(4) Standard Price

(5) Quantity Variance

(6) Explanation.