Question
Standard Costs: Direct Material Direct Labor Variable Overhead Total standard variable cost/unit Standard Quantity 5 pounds 2 hours 2 hours Standard Price $8 per pound
Standard Costs:
Direct Material Direct Labor Variable Overhead Total standard variable cost/unit
Standard Quantity
5 pounds 2 hours 2 hours
Standard Price
$8 per pound $14 per hour $5 per hour
Total Amount $40.0 $28.0 $10.0 $78
Information for March:
Planning budget for March: 25,000 units produced & sold Actual March: 30,000 units produced & sold
a) Purchased 160,000 pounds of material -- all used in production $7.50 per pound
b) Direct-labor hours 55,000 $15.00 per hour
c) Total VOH was $280,500
d) Advertising Sales Salaries & Commissions Shipping $115,000
$210,000 $455,000
How much raw materials costs would be included in the flexible budget for March?
What are the raw materials price & quantity variances for March? What are the journal entries associated with these variances?
What would be the raw materials price & quantity variances in March with the following changed:
Raw materials purchased Purchase price Raw materials used
170,000 pounds $7.50 per pound
160,000 pounds
What direct labor cost would be included in the flexible budget for March:
What is the direct labor rate & efficiency variances in March? What are the journal entries associated with these variances?
What variable manufacturing overhead cost would be included in the flexible budget for March?
What are the variable overhead rate & efficiency variances for March?
What amounts of advertising, sales salaries & commissions, and shipping would be included in the flexible budget for March?
What are the spending variances related to advertising, sales salaries & commissions, and shipping for March?
BA213 Inc
Cost Formulas:
Advertising Sales salaries & commissions Shipping expenses
Fixed Cost Per Month $200,000 $100,000
Variabl Cost Per Unit Sold
$12 $3
**USE THE ATTACHED VARIANCE GRIDS THE ANSWER THE FOLLOWING QUESTIONS***
General Variance Grid Direct Materials -- Direct Labor -- Variable Overhead (VOH)
SQ Standard quantity that should be used for each of the units acutally produced SP Standard price or rate that we planned to pay for the materials/labor AQ Actual quantity used to produce the actual units AP Actual price or rate paid for the materials/labor purchased/used
Change in Quantity SQxUnits Produced Change in Efficiency AQ AQ
XXX Change in Price
SP
(1)
SP
(2)
Spending Variance (1)-(3)
Debit
Change in Rate AP (3)
Price Variance Rate Variance (2)-(3)
Credit
Quantity Variance Efficiency Variance (1)-(2)
Journal Entries: Account
General Variance Grid
Direct Materials
The quantity purchased in the same as the quantity used.
SQ Standard quantity that should be used for each of the units acutally produced SP Standard price or rate that we planned to pay for the material/labor AQ Actual quantity used to produce the actual units AP Actual price or rate paid for the materials/labor purchased/used
Change in Quantity
SQxUnits Produced XXX
Change in Price
SP SP AP
AQ AQ
Journal Entries: Account
(1)
(2)
Spending Variance (1)-(3)
Debit
(3)
Quantity Variance (1)-(2)
Price Variance (2)-(3)
Credit
DM Used/Purchased Split Variance Grid Direct Material purchased in large quantities then used later is smaller quantities
SQ Standard quantity that should be used for each of the units acutally produced SP Standard price or rate that we planned to pay for the materials AQ Actual quantity used to produce the actual units AP Actual price or rate paid for the materials purchased/used
Change in Quantity
Quantity Used in Production -- smaller quantities
SQxUnits Produced XX
SP
(1)
AQ Used SP (2)
Quantity Variance (1)-(2)
AQ Purchased XX
AQ Purchased AP (4)
Journal Entries: Account
SP
(3)
Debit
Change in Price
Price Variance (3)-(4)
Credit
Quantity Purchased -- large quantities
General Variance Grid Direct Labor
SQ Standard quantity that should be used for each of the units acutally produced SP Standard price or rate that we planned to pay for the material or labor AQ Actual quantity used to produce the actual units AP Actual price or rate paid for the materials/labor purchased/used
Change in Efficiency
SQxUnits Produced XXX
Change in Rate
SP SP AP
AQ AQ
Journal Entries: Account
(1)
(2)
Spending Variance (1)-(3)
Debit
(3)
Efficiency Variance (1)-(2)
Rate Variance (2)-(3)
Credit
General Variance Grid Variable Overhead (VOH)
SQ Standard quantity that should be used for each of the units acutally produced SP Standard price or rate that we planned to pay for the material or labor AQ Actual quantity used to produce the actual units AP Actual price or rate paid for the materials purchased/used
Change in Efficiency
SQxUnits Produced XXX
Change in Rate
SP SP AP
AQ AQ
(1)
(2)
Spending Variance (1)-(3)
(3)
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