Problem 10-47 Comprehensive Problem on Variance Analysis (LO 10-1, 10-3, 10-6) Springsteen Company manufactures guitars. The company uses a standard, job-order cost-accounting system in two production departments. In the Construction Department, the wooden guitars are built by highly skilled craftsmen and coated with several layers of lacquer. Then the units are transferred to the Finishing Department, where the bridge of the guitar is attached and the strings are installed. The guitars also are tuned and inspected in the Finishing Department. The diagram below depicts the production process.

Each finished guitar contains seven pounds of veneered wood. In addition, one pound of wood is typically wasted in the production process. The veneered wood used in the guitars has a standard price of $12 per pound. The other parts needed to complete each guitar, such as the bridge and strings, cost $15 per guitar. The labor standards for Springsteens two production departments are as follows: Construction Department: 6 hours of direct labor at $20 per hour Finishing Department: 2 hours of direct labor at $15 per hour The following pertains to the month of July. 1. There were no beginning or ending work-in-process inventories in either production department. 2. There was no beginning finished-goods inventory. 3. Actual production was 520 guitars, and 320 guitars were sold on account for $410 each. 4. The company purchased 6,200 pounds of veneered wood at a price of $12.50 per pound. 5. Actual usage of veneered wood was 4,700 pounds of the wood purchased during July. 6. Enough parts (bridges and strings) to finish 620 guitars were purchased at a cost of $9,020. 7. The Construction Department used 2,870 direct-labor hours. The total direct-labor cost in the Construction Department was $54,530. 8. The Finishing Department used 1,100 direct-labor hours. The total direct-labor cost in that department was $17,600. 9. There were no direct-material variances in the Finishing Department.

Problem 10-47 Part 2

2. Complete the table below that compute the July direct-material and direct-labor variances in the Construction Department and the July direct-labor variances in the Finishing Department. (Refer to Exhibit 10-2, Exhibit 10-3 and Exhibit 10-4 for guidance.)

Reg 2A Req 2B Reg 20 Reg 2D Complete the table below that compute the July direct material price and quantity variance in the Construction Department. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Round "Actual Price" and "Standard Price" to 2 decimal places.) Direct-Material Price and Quantity Variances Projected Material Cost Standard Actual Quantity Price Actual Material Cost Actual Quantity Actual Price Standard Material Cost Standard Quantity Standard Price pounds used per pound pounds used per pound pounds allowed per pound Direct-material price variance Direct-material quantity variance Direct-material variance Complete this question by entering your answers in the tabs below. Reg 2A Req 2B Req 2c Reg 2D Complete the table below that compute the July direct material purchase price variance in the Construction Department. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance). Round "Actual Price" and "Standard Price" to 2 decimal places.) Direct-Material Purchase Price Variance Actual Material Cost Projected Material Cost Actual Standard Actual Quantity Actual Quantity Price Price pounds purchased per pound pounds purchased per pound Direct-material purchase price variance Req 2A Req 2B Reg 20 Reg 2D Complete the table below that compute the July direct-labor rate and efficiency variances in the Construction Department. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect i.e., zero variance). Round "Actual Rate" and "Standard Rate" to 2 decimal places.) Direct-Labor Rate and Efficiency Variances Projected Labor Cost Actual Labor Cost Actual Hours Actual Rate Standard Labor Cost Standard Hours Standard Rate x Actual Hours Standard Rate hours used per hour hours used per hour hours allowed per hour Direct-labor rate variance Direct-labor efficiency variance Direct-labor variance Reg 2A Reg 2B Reg 2c Reg 2D Complete the table below that compute the July direct-labor rate and efficiency variances in the Finishing Department. (Indicate the effect of each variance by selecting "Favorable "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Round "Actual Rate" and "Standard Rate" to 2 decimal places.) Direct-Labor Rate and Efficiency Variances Projected Labor Cost Actual Labor Cost Standard Labor Cost Actual Hours Actual Rate Actual Hours Standard Rate Standard Hours Standard Rate hours used per hour hours used per hour hours allowed per hour Direct-labor rate variance Direct-labor efficiency variance Direct-labor variance