QUESTION 1. Standard Cost Journal Entries

Giovanni Company produced 3,500 units that require four standard gallons per unit at $34.00 standard price per gallon. The company actually used 14,400 gallons in production.

Journalize the entry to record the standard direct materials used in production. For a compound transaction, if an amount box does not require an entry, leave it blank.

QUESTION 2: Income Statement with Variances

Giovanni Company produces a product that requires four standard gallons per unit. The standard price is $34.00 per gallon. Assume the company produced 3,500 units of product. The 3,500 units required 14,400 gallons, which were purchased at $33.25 per gallon. The product requires five standard hours per unit at a standard hourly rate of $30 per hour. The 3,500 units required 17,700 hours at an hourly rate of $30.50 per hour. The standard variable overhead cost per unit is $3.50 per hour. The actual variable factory overhead was $63,400. The standard fixed overhead cost per unit is $1.80 per hour at 17,000 hours, which is 100% of normal capacity.

Prepare a 2014 income statement through gross profit for Giovanni Company. Assume Giovanni sold 3,500 units at $400 per unit. Enter all amounts as positive numbers. If an amount does not require an entry or is zero, enter "0".

QUESTION 3: Flexible Overhead Budget

Wiki Wiki Company has determined that the variable overhead rate is $4.50 per direct labor hour in the Fabrication Department. The normal production capacity for the Fabrication Department is 10,000 hours for the month. Fixed costs are budgeted at $60,000 for the month.

a. Prepare a monthly factory overhead flexible budget for 9,000, 10,000, and 11,000 hours of production. Enter all amounts as positive numbers.

b. How much overhead would be applied to production if 9,000 hours were used in the department during the month? If required, round your calculations to two decimal places and your final answer to the nearest dollar. $

QUESTION 4: Flexible Budgeting and Variance Analysis

I Love My Chocolate Company makes dark chocolate and light chocolate. Both products require cocoa and sugar. The following planning information has been made available:

I Love My Chocolate Company does not expect there to be any beginning or ending inventories of cocoa or sugar. At the end of the budget year, I Love My Chocolate Company had the following actual results:

Required:

1. Prepare the following variance analyses for both chocolates and the total, based on the actual results and production levels at the end of the budget year: Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

A. Direct materials price variance, direct materials quantity variance, and total variance.

B. Direct labor rate variance, direct labor time variance, and total variance.

QUESTION 5: Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis

Sticky 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 10,750 units of product were as follows:

Each unit requires 0.4 hour of direct labor.

Required:

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.

QUESTION 6: Factory Overhead Cost Variance Report

Tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May 2014. The company expected to operate the department at 100% of normal capacity of 8,400 hours.

During May, the department operated at 8,860 standard hours, and the factory overhead costs incurred were indirect factory wages, $32,400; power and light, $21,000; indirect materials, $18,250; supervisory salaries, $20,000; depreciation of plant and equipment, $36,200; and insurance and property taxes, $15,200.

Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 8,860 hours. Enter all amounts as positive numbers. If an amount box does not require an entry or an amount is zero, enter "0". Round your per unit computations to the nearest cent, if required.