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P23-2B Compute variances, and prepare income statement Huang Company uses a standard cost accounting system to account for the manufacture of exhaust fans. In July
| P23-2B Compute variances, and prepare income statement | ||||||||||||||
| Huang Company uses a standard cost accounting system to account for the manufacture of exhaust fans. | ||||||||||||||
| In July 2014, its accumulates the following data relative to 1,800 units started and finished. | ||||||||||||||
| Cost and Production Data | Actual | Standard | ||||||||||||
| Raw materials | ||||||||||||||
| Units purchased | 21,000 | |||||||||||||
| Units used | $21,000 | $22,000 | ||||||||||||
| Unit cost | $3.70 | $3.50 | ||||||||||||
| Direct labor | ||||||||||||||
| Hours worked | 3,450 | $3,600 | ||||||||||||
| Hourly rate | $11.50 | $12.00 | ||||||||||||
| Manufacturing overhead | ||||||||||||||
| Incurred | $94,800 | |||||||||||||
| Applied | $100,800 | |||||||||||||
| Manufacturing overhead was applied on the basis of direct labor hours. Normal capacity for the month was 3,400 | ||||||||||||||
| direct labor hours. At normal capacity, budgeted overhead costs were $16 per labor hour variable and $12 per labor | ||||||||||||||
| hour fixed. Total budgeted fixed overhead costs were $40,800. | ||||||||||||||
| Jobs finished during the month were sold for $270,000. Selling and administrative expenses were $20,000. | ||||||||||||||
| Instructions | ||||||||||||||
| (a) Compute all of the variances for (1) direct materials and (2) direct labor. | ||||||||||||||
| (b) Compute the total overhead variance. | ||||||||||||||
| (c) Prepare an income statement for management. (Ignore income taxes.) | ||||||||||||||
| NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" . | ||||||||||||||
| (a)(1) | Total Materials Variance: | |||||||||||||
| ( | AQ | X | AP | ) | minus | ( | SQ | X | SP) | ) | ||||
| ( | Value | X | Value | ) | minus | ( | Value | X | Value | ) | ||||
| = | ? | minus | ? | = | Value | |||||||||
| Materials price variance: | ||||||||||||||
| ( | AQ | X | AP | ) | minus | ( | AQ | X | SP | ) | ||||
| ( | Value | X | Value | ) | minus | ( | Value | X | Value | ) | ||||
| = | ? | minus | ? | = | Value | |||||||||
| Materials quantity variance: | ||||||||||||||
| ( | AQ | X | SP | ) | minus | ( | SQ | X | SP | ) | ||||
| ( | Value | X | Value | ) | minus | ( | Value | X | Value | ) | ||||
| = | ? | minus | ? | = | Value | |||||||||
| (a)(2) | Total Labor Variance: | |||||||||||||
| ( | AH | X | AR | ) | minus | ( | SH | X | SR | ) | ||||
| ( | Value | X | Value | ) | minus | ( | Value | X | Value | ) | ||||
| = | ? | minus | ? | = | Value | |||||||||
| Labor Price variance: | ||||||||||||||
| ( | AH | X | AR | ) | minus | ( | AH | X | SR | ) | ||||
| ( | Value | X | Value | ) | minus | ( | Value | X | Value | ) | ||||
| = | ? | minus | ? | = | Value | |||||||||
| Labor quantity variance: | ||||||||||||||
| ( | AH | X | SR | ) | minus | ( | SH | X | SR | ) | ||||
| ( | Value | X | Value | ) | minus | ( | Value | X | Value | ) | ||||
| = | ? | minus | ? | = | Value | |||||||||
| (b) | Total Overhead Variance: | |||||||||||||
| = | Actual | minus | Overhead | |||||||||||
| Overhead | Applied | |||||||||||||
| = | Value | minus | Value | = | Value | |||||||||
| (c ) | HUANG COMPANY | |||||||||||||
| Income Statement | ||||||||||||||
| For the Month Ended July 31, 2014 | ||||||||||||||
| Sales revenue | Value | |||||||||||||
| Cost of goods sold (at standard) | Value | |||||||||||||
| Gross profit (at standard) | Value | |||||||||||||
| Variances | ||||||||||||||
| Material price | Value | |||||||||||||
| Materials quantity | Value | |||||||||||||
| Labor price | Value | |||||||||||||
| Labor quantity | Value | |||||||||||||
| Overhead | Value | |||||||||||||
| Total variance - favorable | Value | |||||||||||||
| Gross profit (actual) | Value | |||||||||||||
| Selling and administrative expenses | Value | |||||||||||||
| Net income | Value | |||||||||||||
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Data Analytics For Auditing Using ACL
Authors: Alvin A. Arens
4th Edition
0912503629, 978-0912503622
