Question
Problem 1: Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis Eastern Polymers, Inc., processes a base chemical into plastic. Standard costs and actual
Problem 1:
Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis
Eastern Polymers, Inc., processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 5,600 units of product were as follows:
Standard Costs | Actual Costs | ||
Direct materials | 7,800 lbs. at $4.60 | 7,700 lbs. at $4.50 | |
Direct labor | 1,400 hrs. at $16.70 | 1,430 hrs. at $16.90 | |
Factory overhead | Rates per direct labor hr., | ||
based on 100% of normal | |||
capacity of 1,460 direct | |||
labor hrs.: | |||
Variable cost, $3.90 | $5,410 variable cost | ||
Fixed cost, $6.20 | $9,052 fixed cost |
Each unit requires 0.25 hour of direct labor.
Required: Fill out the oxes in blank:
a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Problem 2:
Differential Analysis for Sales Promotion Proposal
L'Essence Cosmetics Company is planning a one-month campaign for June to promote sales of one of its two cosmetics products. A total of $80,000 has been budgeted for advertising, contests, redeemable coupons, and other promotional activities. The following data have been assembled for their possible usefulness in deciding which of the products to select for the campaign:
Moisturizer | Perfume | ||||
Unit selling price | $47 | $52 | |||
Unit production costs: | |||||
Direct materials | $ 8 | $11 | |||
Direct labor | 3 | 4 | |||
Variable factory overhead | 2 | 3 | |||
Fixed factory overhead | 5 | 5 | |||
Total unit production costs | $18 | $23 | |||
Unit variable selling expenses | 15 | 14 | |||
Unit fixed selling expenses | 8 | 6 | |||
Total unit costs | $41 | $43 | |||
Operating income per unit | $ 6 | $ 9 |
No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 19,000 additional units of moisturizer or 16,000 additional units of perfume could be sold without changing the unit selling price of either product.
Required: Fill out the oxes in blank
Problem 3:
The capital investment committee of Cross Continent Trucking Inc. is considering two capital investments. The estimated income from operations and net cash flows from each investment are as follows:
Warehouse | Tracking Technology | |||||||||
Year | Income from Operations | Net Cash Flow | Income from Operations | Net Cash Flow | ||||||
1 | $33,000 | $102,000 | $69,000 | $163,000 | ||||||
2 | 33,000 | 102,000 | 53,000 | 138,000 | ||||||
3 | 33,000 | 102,000 | 26,000 | 97,000 | ||||||
4 | 33,000 | 102,000 | 12,000 | 66,000 | ||||||
5 | 33,000 | 102,000 | 5,000 | 46,000 | ||||||
Total | $165,000 | $510,000 | $165,000 | $510,000 |
Each project requires an investment of $440,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 12% for purposes of the net present value analysis.
Present Value of $1 at Compound Interest | |||||
Year | 6% | 10% | 12% | 15% | 20% |
1 | 0.943 | 0.909 | 0.893 | 0.870 | 0.833 |
2 | 0.890 | 0.826 | 0.797 | 0.756 | 0.694 |
3 | 0.840 | 0.751 | 0.712 | 0.658 | 0.579 |
4 | 0.792 | 0.683 | 0.636 | 0.572 | 0.482 |
5 | 0.747 | 0.621 | 0.567 | 0.497 | 0.402 |
6 | 0.705 | 0.564 | 0.507 | 0.432 | 0.335 |
7 | 0.665 | 0.513 | 0.452 | 0.376 | 0.279 |
8 | 0.627 | 0.467 | 0.404 | 0.327 | 0.233 |
9 | 0.592 | 0.424 | 0.361 | 0.284 | 0.194 |
10 | 0.558 | 0.386 | 0.322 | 0.247 | 0.162 |
Required: Fill out the oxes in blank
Problem 4:
Alabama Paper Company manufactures three products (computer paper, newsprint, and specialty paper) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows:
Activity | Activity Cost Pool | |||
Production | $394,200 | |||
Setup | 282,800 | |||
Moving | 65,700 | |||
Shipping | 127,100 | |||
Product Engineering | 64,500 | |||
Total | $934,300 |
The activity bases identified for each activity are as follows:
Activity | Activity Base |
Production | Machine hours |
Setup | Number of setups |
Moving | Number of moves |
Shipping | Number of customer orders |
Product Engineering | Number of test runs |
The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:
Machine Hours | Number of Setups | Number of Moves | Number of Customer Orders | Number of Test Runs | Units | ||
Computer Paper | 3,210 | 180 | 180 | 820 | 50 | 8,025 | |
Newsprint | 2,040 | 270 | 270 | 2,260 | 320 | 5,100 | |
Specialty Paper | 2,050 | 250 | 450 | 1,020 | 130 | 5,125 | |
Total | 7,300 | 700 | 900 | 4,100 | 500 | 18,250 |
Each product requires 0.9 machine hour per unit.
Required: Fill out the oxes in blank
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