1. Genuine Spice Inc. began operations on January 1 of the current year. The company produces 8-ounce bottles of hand and body lotion called Eternal Beauty. The lotion is sold wholesale in 12-bottle cases for $100 per case. There is a selling commission of $20 per case. The January direct materials, direct labor, and factory overhead costs are as follows:

   DIRECT MATERIALS
   	Cost Behavior	Units per Case	Cost per Unit	Direct Materials Cost per Case
   Cream base	Variable	100 ozs.	$0.02		$2.00
   Natural oils	Variable	30 ozs.	0.30		9.00
   Bottle (8-oz.)	Variable	12 bottles	0.50		6.00
   					$17.00

   DIRECT LABOR
   Department	Cost Behavior	Time per Case			Labor Rate per Hour	Direct Labor Cost per Case
   Mixing	Variable		20	min.	$18.00		$6.00
   Filling	Variable		5		14.40		1.20
   			25	min.			$7.20

   FACTORY OVERHEAD
   	Cost Behavior	Total Cost
   Utilities	Mixed		$600
   Facility lease	Fixed		14,000
   Equipment depreciation	Fixed		4,300
   Supplies	Fixed		660
   			$19,560

   Part CAugust Variance Analysis

   During September of the current year, the controller was asked to perform variance analyses for August. The January operating data provided the standard prices, rates, times, and quantities per case. There were 1,500 actual cases produced during August, which was 250 more cases than planned at the beginning of the month. Actual data for August were as follows:

   	Actual Direct Materials Price per Unit		Actual Direct Materials Quantity per Case
   Cream base	$0.016	per oz.	102	ozs.
   Natural oils	$0.32	per oz.	31	ozs.
   Bottle (8-oz.)	$0.42	per bottle	12.5	bottles

   	Actual Direct Labor Rate	Actual Direct Labor Time per Case
   Mixing	$18.20	19.50 min.
   Filling	14.00	5.60 min.
   Actual variable overhead	$305.00
   Normal volume	1,600 cases

   The prices of the materials were different than standard due to fluctuations in market prices. The standard quantity of materials used per case was an ideal standard. The Mixing Department used a higher grade labor classification during the month, thus causing the actual labor rate to exceed standard. The Filling Department used a lower grade labor classification during the month, thus causing the actual labor rate to be less than standard.

   Required:

   10. Determine the direct materials price and quantity variances for the three materials. Enter the costs in dollars and cents (carried to three decimal places when required). Enter all amounts as positive numbers.

   Direct Materials Price Variance:
   	Cream Base		Natural Oils		Bottles
   Actual price	$fill in the blank 1		$fill in the blank 2		$fill in the blank 3
   Standard price	fill in the blank 4		fill in the blank 5		fill in the blank 6
   Difference	$fill in the blank 7		$fill in the blank 8		$fill in the blank 9
   Actual quantity (units)	Xfill in the blank 10	ozs.	Xfill in the blank 11	ozs.	Xfill in the blank 12	btls.
   Direct materials price variance	$fill in the blank 13		$fill in the blank 14		$fill in the blank 15
   Indicate if favorable or unfavorable	FavorableUnfavorableFavorable		FavorableUnfavorableUnfavorable		FavorableUnfavorableFavorable

   Enter the standard price to two decimal places.

   Direct Materials Quantity Variance:
   	Cream Base		Natural Oils		Bottles
   Actual quantity	fill in the blank 19	ozs.	fill in the blank 20	ozs.	fill in the blank 21	btls.
   Standard quantity	fill in the blank 22		fill in the blank 23		fill in the blank 24
   Difference	fill in the blank 25	ozs.	fill in the blank 26	ozs.	fill in the blank 27	btls.
   Standard price	Xfill in the blank 28		Xfill in the blank 29		Xfill in the blank 30
   Direct materials quantity variance	$fill in the blank 31		$fill in the blank 32		$fill in the blank 33
   Indicate if favorable or unfavorable	FavorableUnfavorableUnfavorable		FavorableUnfavorableUnfavorable		FavorableUnfavorableUnfavorable

   11. Determine the direct labor rate and time variances for the two departments. Do not round hours. Enter the costs in dollars and cents. Enter all amounts as positive numbers.

   Direct Labor Rate Variance:
   	Mixing Department		Filling Department
   Actual rate	$fill in the blank 37		$fill in the blank 38
   Standard rate	fill in the blank 39		fill in the blank 40
   Difference	$fill in the blank 41		$fill in the blank 42
   Actual time (hours)	Xfill in the blank 43		Xfill in the blank 44
   Direct labor rate variance	$fill in the blank 45		$fill in the blank 46
   Indicate if favorable or unfavorable	FavorableUnfavorableUnfavorable		FavorableUnfavorableFavorable

   Direct Labor Time Variance:
   	Mixing Department		Filling Department
   Actual time (hours)	fill in the blank 49		fill in the blank 50
   Standard time (hours)	fill in the blank 51		fill in the blank 52
   Difference	fill in the blank 53		fill in the blank 54
   Standard rate	X $fill in the blank 55		X $fill in the blank 56
   Direct labor time variance	$fill in the blank 57		$fill in the blank 58
   Indicate if favorable or unfavorable	FavorableUnfavorableFavorable		FavorableUnfavorableUnfavorable

   12. Determine the factory overhead controllable variance. Enter all amounts as positive numbers.

   Actual variable overhead	$fill in the blank 61
   Variable overhead at standard cost	fill in the blank 62
   Factory overhead controllable variance	$fill in the blank 63
   Indicate if favorable or unfavorable	FavorableUnfavorableUnfavorable

   13. Determine the factory overhead volume variance. Round rate to two decimal places and round your final answer to two decimal places. Enter all amounts as positive numbers.

   Normal volume (cases)	fill in the blank 65
   Actual volume (cases)	fill in the blank 66
   Difference	fill in the blank 67
   Fixed factory overhead rate	$fill in the blank 68
   Factory overhead volume variance	$fill in the blank 69
   Indicate if favorable or unfavorable	FavorableUnfavorableUnfavorable

   14. The production volume of fill in the blank 71 cases was planned at the beginning of August. The variances compare the actual cost and the standard cost of

   actual productionbudgeted productionactual production

   for the month. Thus, the standard cost must be based on the fill in the blank 73 units of actual production.

   Feedback Area

   Feedback

   10. Direct Materials Price variance is the difference between the actual and standard prices, multiplied by the actual quantity. Direct Materials Quantity variance is the difference between the actual and standard quantities, multiplied by the standard price. What caused the price and quantity variances? 11. Direct Labor rate variance is the difference between the actual and standard hourly rates, multiplied by the actual hours. Direct Labor Time variance is the difference between the actual and standard hours, multiplied by the standard rate per hour. What caused the rate and time variances? 12, 13. Factory Overhead controllable variance is the difference between the actual variable overhead and the standard variable overhead for actual units. (Use the high-low method to determine the variable overhead.) Overhead volume variance is the difference between the normal production capacity and the actual units produced, multiplied by the fixed Factory overhead rate. What caused the controllable and volume variances? 14. The variances compare the actual cost and the standard cost of actual production for the month.

   Learning Objective 2, Learning Objective 3, Learning Objective 4 and Learning Objective 5

Check My Work9 more Check My Work uses remaining.

• Previous