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 Quantity per Case Cream base $0 016 per oz 102 oz Natural oils $0 32 per oz 31 oz Bottle (8 oz ) $0 42 per bottle 12 5 bottles Actual Direct Actual Direct Labor Labor Rate 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 from 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 Part C 10 Determine and interpret the direct materials price and quantity variances for the three materials 11 Determine and interpret the direct labor rate and time variances for the two departments Round hours to the nearest tenth of an hour 12 Determine and interpret the factory overhead controllable variance 13 Determine and interpret the factory overhead volume variance 14 Why are the standard direct labor and direct materials costs in the calculations for parts (10) and (11) based on the actual 1,500 case production volume rather than the planned 1,375 cases of production used in the budgets for parts (6) and (7) 8 Prepare the August factory overhead cost budget Enter all amounts as positive numbers If an amount box does not require an entry, leave it blank (Entries of zero (0) will be cleared automatically by CNOW ) Genuine Spice Inc Factory Overhead Cost Budget For the Month Ended August 31 Fixed Variable Total Factory overhead Utilities Facility lease Equipment depreciation Supplies Total Prepare the August budgeted income statement, including selling expenses Enter all amounts as positive numbers NOTE Because you are not required to prepare a cost of goods sold budget, the cost of goods sold calculations will be part of the budgeted income statement Genuine Spice Inc Budgeted Income Statement For the Month Ended August 31 Revenue from sales Finished goods inventory, August 1 Direct materials Direct materials inventory, August 1 Direct materials purchases Cost of direct materials available for use Less direct materials inventory, August 31 Cost of direct materials placed in production Direct labor Factory overhead Cost of goods manufactured Cost of finished goods available for sale Less finished goods inventory, August 31 Cost of goods sold Gross profit Selling expenses Income before income tax 10 Determine and interpret the direct materials price and quantity variances for the three materials Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount Direct Materials Price Variance Cream Base Natural Oils Bottles Difference X Direct materials price variance Direct Materials Quantity Variance Cream Base Natural Oils Bottles Difference X Direct materials quantity variance The fluctuation in caused the direct material price variances All the quantity variances were indicating 11 Determine and interpret the direct labor rate and time variances for the two departments Round hours to the nearest tenth of an hour Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount Direct Labor Rate Variance Mixing Department Filling Department Difference X Direct labor rate variance Direct Labor Time Variance Mixing Department Filling Department Difference X Direct labor time variance The change in the caused the labor rate variances This change have been responsible for the direct labor time variance 12 Determine and interpret the factory overhead controllable variance Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount Factory Overhead Controllable Variance Factory overhead controllable variance The factory overhead controllable variance was caused by the variance in 13 Determine and interpret the factory overhead volume variance Round rate to four decimal places Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount Factory Overhead Volume Variance Normal volume (cases) Actual volume (cases) Difference X Factory overhead volume variance The volume variance indicates the cost of 14 Why are the standard direct labor and direct materials costs in the calculations for parts (10) and (11) based on the actual 1,500 case production volume rather than the planned 1,375 cases of production used in the budgets for parts (6) and (7)

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 09, 2024

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

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	Quantity per Case
Cream base	$0.016 per oz.	102 oz.
Natural oils	$0.32 per oz.	31 oz.
Bottle (8-oz.)	$0.42 per bottle	12.5 bottles

	Actual Direct	Actual Direct Labor
	Labor Rate	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 from 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-Part C:
10.	Determine and interpret the direct materials price and quantity variances for the three materials.
11.	Determine and interpret the direct labor rate and time variances for the two departments. Round hours to the nearest tenth of an hour.
12.	Determine and interpret the factory overhead controllable variance.
13.	Determine and interpret the factory overhead volume variance.
14.	Why are the standard direct labor and direct materials costs in the calculations for parts (10) and (11) based on the actual 1,500-case production volume rather than the planned 1,375 cases of production used in the budgets for parts (6) and (7)?

8. Prepare the August factory overhead cost budget. Enter all amounts as positive numbers. If an amount box does not require an entry, leave it blank. (Entries of zero (0) will be cleared automatically by CNOW.)

Genuine Spice Inc.
Factory Overhead Cost Budget
For the Month Ended August 31
	Fixed	Variable	Total
Factory overhead:
Utilities
Facility lease
Equipment depreciation
Supplies
Total

Prepare the August budgeted income statement, including selling expenses. Enter all amounts as positive numbers. NOTE: Because you are not required to prepare a cost of goods sold budget, the cost of goods sold calculations will be part of the budgeted income statement.

Genuine Spice Inc.
Budgeted Income Statement
For the Month Ended August 31
Revenue from sales
Finished goods inventory, August 1
Direct materials:
Direct materials inventory, August 1
Direct materials purchases
Cost of direct materials available for use
Less direct materials inventory, August 31
Cost of direct materials placed in production
Direct labor
Factory overhead
Cost of goods manufactured
Cost of finished goods available for sale
Less finished goods inventory, August 31
Cost of goods sold
Gross profit
Selling expenses
Income before income tax

10. Determine and interpret the direct materials price and quantity variances for the three materials. Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount.

Direct Materials Price Variance
	Cream Base	Natural Oils	Bottles


Difference
X
Direct materials price variance

Direct Materials Quantity Variance
	Cream Base	Natural Oils	Bottles


Difference
X
Direct materials quantity variance

The fluctuation in caused the direct material price variances. All the quantity variances were indicating .

11. Determine and interpret the direct labor rate and time variances for the two departments. Round hours to the nearest tenth of an hour. Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount.

Direct Labor Rate Variance
	Mixing Department	Filling Department


Difference
X
Direct labor rate variance

Direct Labor Time Variance
	Mixing Department	Filling Department


Difference
X
Direct labor time variance

The change in the caused the labor rate variances. This change have been responsible for the direct labor time variance.

12. Determine and interpret the factory overhead controllable variance. Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount.

Factory Overhead Controllable Variance


Factory overhead controllable variance

The factory overhead controllable variance was caused by the variance in .

13. Determine and interpret the factory overhead volume variance. Round rate to four decimal places. Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount.

Factory Overhead Volume Variance
Normal volume (cases)
Actual volume (cases)
Difference
X
Factory overhead volume variance

The volume variance indicates the cost of .

14. Why are the standard direct labor and direct materials costs in the calculations for parts (10) and (11) based on the actual 1,500-case production volume rather than the planned 1,375 cases of production used in the budgets for parts (6) and (7)?