lOMoARcPSD|8877869

Marley Company
The following July information is for Marley Company:

Standards:
Material 3.0 feet per unit @ $4.20 per foot
Labor 2.5 hours per unit @ $7.50 per hour
Actual:

Production 2,750 units produced during the month

Material 8,700 feet used; 9,000 feet purchased @ $4.50 per
foot
Labor 7,000 direct labor hours @ $7.90 per hour
(Round all answers to the nearest dollar.)

32. Refer to Marley Company. What is the material price variance (calculated at point of
purchase)?

33. Refer to Marley Company. What is the material quantity variance?

34. Refer to Marley Company. What is the labor rate variance?

35. Refer to Marley Company. What is the labor efficiency variance?

McCoy Company
McCoy Company has the following information available for October when 3,500 units were
produced (round answers to the nearest dollar).

Standards:
Material 3.5 pounds per unit @ $4.50 per
pound
Labor 5.0 hours per unit @ $10.25 per hour

Actual:
Material purchased 12,300 pounds @ $4.25
Material used 11,750 pounds 17,300
direct labor hours @ $10.20 per hour

56. Refer to McCoy Company. What is the labor rate variance?

57. Refer to McCoy Company. What is the labor efficiency variance?

58. Refer to McCoy Company. What is the material price variance (based on quantity purchased)?

59. Refer to McCoy Company. What is the material quantity variance?

60. Refer to McCoy Company. Assume that the company computes the material price variance on
the basis of material issued to production. What is the total material variance?

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Scott Manufacturing
The following March information is available for Scott Manufacturing Company when it
produced 2,100 units:

Standard:
Material 2 pounds per unit @ $5.80 per pound Labor
3 direct labor hours per unit @ $10.00 per hour

Actual:
Material 4,250 pounds purchased and used @ $5.65 per pound
Labor 6,300 direct labor hours at $9.75 per hour

61. Refer to Scott Manufacturing. What is the material price variance?

62. Refer to Scott Manufacturing. What is the material quantity variance?

63. Refer to Scott Manufacturing. What is the labor rate variance?

64. Refer to Scott Manufacturing. What is the labor efficiency variance?

Forrest Company
Forrest Company uses a standard cost system for its production process and applies overhead
based on direct labor hours. The following information is available for August when Forrest
made 4,500 units:

Standard:
DLH per unit 2.50
Variable overhead per DLH $1.75
Fixed overhead per DLH $3.10
Budgeted variable overhead $21,875
Budgeted fixed overhead $38,750

Actual:
Direct labor hours 10,000
Variable overhead $26,250
Fixed overhead $38,000

65. Refer to Forrest Company. Using the one-variance approach, what is the total overhead
variance?

66. Refer to Forrest Company. Using the two-variance approach, what is the controllable
variance?

67. Refer to Forrest Company. Using the two-variance approach, what is the noncontrollable
variance?

68. Refer to Forrest Company. Using the three-variance approach, what is the spending variance?

69. Refer to Forrest Company. Using the three-variance approach, what is the efficiency
variance?

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70. Refer to Forrest Company. Using the three-variance approach, what is the volume variance?

71. Refer to Forrest Company. Using the four-variance approach, what is the variable overhead
spending variance?

72. Refer to Forrest Company. Using the four-variance approach, what is the variable overhead
efficiency variance?

73. Refer to Forrest Company. Using the four-variance approach, what is the fixed overhead
spending variance?

74. Refer to Forrest Company. Using the four-variance approach, what is the volume variance? a.
$3,125 F

Rainbow Company
Rainbow Company uses a standard cost system for its production process. Rainbow Company
applies overhead based on direct labor hours. The following information is available for July:

Standard:
Direct labor hours per unit 2.20
Variable overhead per hour $2.50
Fixed overhead per hour
(based on 11,990 DLHs) $3.00

Actual:
Units produced 4,400
Direct labor hours 8,800
Variable overhead $29,950
Fixed overhead $42,300

75. Refer to Rainbow Company Using the four-variance approach, what is the variable overhead
spending variance?

76. Refer to Rainbow Company Using the four-variance approach, what is the variable overhead
efficiency variance?

77. Refer to Rainbow Company Using the four-variance approach, what is the fixed overhead
spending variance?

78. Refer to Rainbow Company Using the four-variance approach, what is the volume variance?

79. Refer to Rainbow Company Using the three-variance approach, what is the spending
variance?

80. Refer to Rainbow Company Using the three-variance approach, what is the efficiency
variance?

81. Refer to Rainbow Company Using the three-variance approach, what is the volume variance?

82. Refer to Rainbow Company Using the two-variance approach, what is the controllable
variance?

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83. Refer to Rainbow Company Using the two-variance approach, what is the noncontrollable
variance?

84. Refer to Rainbow Company Using the one-variance approach, what is the total variance?

85. Actual fixed overhead is $33,300 (12,000 machine hours) and fixed overhead was estimated
at $34,000 when the predetermined rate of $3.00 per machine hour was set. If 11,500 standard
hours were allowed for actual production, applied fixed overhead is

86. One unit requires 2 direct labor hours to produce. Standard variable overhead per unit is $1.25
and standard fixed overhead per unit is $1.75. If 330 units were produced this month, what
total amount of overhead is applied to the units produced?

Western Company uses a standard cost accounting system. The following overhead costs and
production data are available for August:

Standard fixed OH rate per DLH $1

Standard variable OH rate per DLH $4
Budgeted monthly DLHs 40,000
Actual DLHs worked 39,500
Standard DLHs allowed for actual production 39,000 Overall OH
variance-favorable $2,000

The total applied manufacturing overhead for August

should be
87. Paramount Company uses a standard cost
system and prepared the following budget at normal
capacity for January:
24,000
Direct labor hours
Variable OH $48,000
Fixed OH $108,000
Total OH per DLH $6.50

Actual data for January were as follows:

Direct labor hours worked 22,000
Total OH $147,000
Standard DLHs allowed for capacity attained 21,000

88. Using the two-way analysis of overhead variances, what is the controllable
variance for January?

89. The following information is available from the Fitzgerald Company:

Actual OH $15,000
Fixed OH expenses, actual $7,200
Fixed OH expenses, budgeted $7,000
Actual hours 3,500
Standard hours 3,800
Variable OH rate per DLH $2.50

Assuming that Fitzgerald uses a three-way analysis of overhead variances, what is the
overhead spending variance?

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90. Hagman Company uses a two-way analysis of overhead variances. Selected data for the April
production activity are as follows:
Actual variable OH incurred $196,000
Variable OH rate per MH $6
Standard MHs allowed 33,000
Actual MHs 32,000

Assuming that budgeted fixed overhead costs are equal to actual fixed costs, the controllable
variance for April is

91. Oxygen Company uses a standard cost system. Overhead cost information for October is as
follows:
Total actual overhead incurred $12,600
Fixed overhead budgeted $3,300
Total standard overhead rate per MH $4
Variable overhead rate per MH $3 Standard MHs allowed for actual
production 3,500
What is the
totaloverheadvariance?

Uniform Company
Uniform Company has developed standard overhead costs based on a capacity of 180,000
machine hours as follows:
Standard costs per unit:
Variable portion 2 hours @ $3 = $ 6
Fixed portion 2 hours @ $5 = 10
$16
During April, 85,000 units were scheduled for production, but only 80,000 units were actually
produced. The following data relate to April:
Actual machine hours used were 165,000.
Actual overhead incurred totaled $1,378,000 ($518,000 variable plus $860,000
fixed). All inventories are carried at standard cost.

92. Refer to Uniform Company. The variable overhead spending variance for April was

93. Refer to Uniform Company. The variable overhead efficiency variance for April was

94. Refer to Uniform Company. The fixed overhead spending variance for April was

95. Refer to Uniform Company. The fixed overhead volume variance for April was

Ultra Shine Company

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Ultra Shine Company manufactures a cleaning solvent. The company employs both skilled and
unskilled workers. To produce one 55-gallon drum of solvent requires Materials A and B as
well as skilled labor and unskilled labor. The standard and actual material and labor
information is presented below:

Standard:
Material A: 30.25 gallons @ $1.25 per gallon
Material B: 24.75 gallons @ $2.00 per gallon
Skilled Labor: 4 hours @ $12 per hour
Unskilled Labor: 2 hours @ $ 7 per hour

Actual:
Material A: 10,716 gallons purchased and used @ $1.50 per gallon
Material B: 17,484 gallons purchased and used @ $1.90 per gallon
Skilled labor hours: 1,950 @ $11.90 per hour
Unskilled labor hours: 1,300 @ $7.15 per hour
During the current month Ultra Shine Company manufactured 500 55-gallon drums.
Round all answers to the nearest whole dollar.

96. Refer to Ultra Shine Company. What is the total material price variance?

97. Refer to Ultra Shine Company. What is the total material mix variance?

98. Refer to Ultra Shine Company. What is the total material yield variance?

99. Refer to Ultra Shine Company. What is the labor rate variance?

100. Refer to Ultra Shine Company. What is the labor mix variance?

101. Refer to Ultra Shine Company. What is the labor yield variance?

PROBLEM
Fitzhugh Company

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Fitzhugh Company has the following information available for the current year:
Standard:
Material 3.5 feet per unit @ $2.60 per foot
Labor 5 direct labor hours @ $8.50 per unit
Actual:

Material 95,625 feet used (100,000 feet purchased @ $2.50 per foot)
Labor 122,400 direct labor hours incurred per unit @ $8.35 per
hour
25,500 units were produced

1. Refer to Fitzhugh Company. Compute the material purchase price and quantity
variances.
2. Refer to Fitzhugh Company. Compute the labor rate and efficiency variances.

Taylor Company
Taylor Company applies overhead based on direct labor hours and has the following available
for November:

Standard:
Direct labor hours per unit 5
Variable overhead per DLH $.75
Fixed overhead per DLH
(based on 8,900 DLHs) $1.90

Actual:
Units produced 1,800
Direct labor hours 8,900
Variable overhead $6,400
Fixed overhead $17,500

3. Refer to Taylor Company. Compute all the appropriate variances using the two-
variance approach.
4. Refer to Taylor Company. Compute all the appropriate variances using the four-
variance approach.
5. Refer to Taylor Company. Compute all the appropriate variances using the three-
variance approach.

The Michigan Company has made the following information available for its production facility
for the month of June. Fixed overhead was estimated at 19,000 machine hours for the production
cycle.

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Actual machine hours for the period were 18,900, which generated 3,900 units.
Material purchased (80,000 pieces) $314,000
Material quantity variance $6,400 U
Machine hours used (18,900 hours)
VOH spending variance $50 U
Actual fixed overhead $60,000
Actual labor cost $40,120
Actual labor hours 5,900
Michigan’s standard costs are as follows:

Direct material 20 pieces @ $4 per piece

Direct labor 1.5 hours @ $6 per hour
Variable overhead
(applied on a machine hour basis) 4.8 hours @ $2.50 per
Fixed overhead hour
(applied on a machine hour basis) 4.8 hours @ $3 per hour

Determine the following items:

a. material purchase price variance
b. standard quantity allowed for material
c. total standard cost of material allowed
d. actual quantity of material used
e. labor rate variance
f. standard hours allowed for labor
g. total standard cost of labor allowed
h. labor efficiency variance
i. actual variable overhead incurred
j. standard machine hours allowed
k. variable overhead efficiency variance
l. budgeted fixed overhead
m. applied fixed overhead
n. fixed overhead spending variance
o. volume variance
p. total overhead variance

Whitestone Company
The following information is available for Whitestone Company for the current year:
Standard:
Material X: 3.0 pounds per unit @ $4.20 per pound
Material Y: 4.5 pounds per unit @ $3.30 per pound

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Class S labor: 3 hours per unit @ $10.50 per

hour Class US labor: 7 hours per unit @ $8.00
per hour
Actual:
Material X: 3.6 pounds per unit @ $4.00 per pound (purchased and used)
Material Y: 4.4 pounds per unit @ $3.25 per pound (purchased and used)
Class S labor: 3.8 hours per unit @ $10.60 per
hour Class US labor: 5.7 hours per unit @ $7.80
per hour Whitestone Company produced a total
of 45,750 units.

7. Refer to Whitestone Company. Compute the material price, mix, and yield variances (round to
the
8. Refer to Whitestone Company. Compute the labor rate, mix, and yield variances (round to the
nearest dollar).
9. Peoria Corporation produces a product using the following standard proportions and costs of
material:
Cost Per
Pounds Pound Amount
Material A 50 $5.00 $250.00
Material B 40 6.00 240.00
Material C 6 0 3.00 180.0
0
150 4.4667 $670.00
Standard shrinkage (33 1/3%) 5 0
Net weight and cost 100 6.70 $670.00
A recent production run yielding 100 output pounds required an input of:
Cost Per
Amount Pound
Material A 40 $5.15
Material B 50 6.00

Material C 65 2.80
Required: Material price, mix, and yield variances.

10. Sparkle Company began business early in January using a standard costing for its single
product. With standard capacity set at 10,000 standard productive hours per month, the
following standard cost sheet was set up for one unit of product:
Direct material-5 pieces @ $2.00 $10.00
Direct labor (variable)-1 sph @ $3.00 3.00
Manufacturing overhead:

Fixed-1 sph @ $3.00 $3.00

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Variable-1 sph @ $2.00 2.00 5.00

Fixed costs are incurred evenly throughout the year. The following unfavorable variances from
standard costs were recorded during the first month of operations:
Material price $ 0
Material usage 4,000
Labor rate 800
Labor efficiency 300
Overhead volume 6,000
Overhead budget (2 variance analysis) 1,000

Required: Determine the following: (a) fixed overhead budgeted for a year; (b) the number
of units completed during January assuming no work in process at January 31; (c) debits made
to the Work in Process account for direct material, direct labor, and manufacturing overhead;
(d) number of pieces of material issued during January; (e) total of direct labor payroll
recorded for January; (f) total of manufacturing overhead recorded in January
.
11. A firm producing one product has a budgeted overhead of $100,000, of which $20,000 is
variable. The budgeted direct labor is 10,000 hours.
Required: Fill in the blanks.
a. Volume
Production Flexible Budget Applied Variance

120% ____________ ____________ ____________

100% ____________ ____________ ____________

80% ____________ ____________ ____________

60% ____________ ____________ ____________

b. What is the budget variance at the 80 percent level if the actual overhead
incurred is $87,000?

12. Bugs NoMore Company manufactures a product effective in controlling beetles. The company
uses a standard cost system and a flexible budget. Standard cost of a gallon is as follows:

Direct material:
2 quarts of A $14
4 quarts of B 1
6
Total direct material $30
Direct labor:

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2 hours 16
Manufacturing overhead 1
2
Total $58

The flexible budget system provides for $50,000 of fixed overhead at normal capacity of
10,000 direct labor hours. Variable overhead is projected at $1 per direct labor hour.
Actual results for the period indicated the following:
Production: 5,000 gallons
Direct material:
A 12,000 quarts purchased at a cost of $7.20/quart; 10,500 quarts
used
B 20,000 quarts purchased at a cost of $3.90/quart; 19,800 quarts
used
Direct labor: 9,800 hours worked at a cost of $79,380
Overhead: Fixed $48,100
Variable 21,000
Total overhead $69,100

Required:
1. What is the application rate per direct labor hour, the total overhead cost equation, the
standard quantity for each material, and the standard hours?
2. Compute the following variances:
a. Total material price variance
b. Total material quantity variance
c. Labor rate variance
d. Labor efficiency variance
e. MOH volume variance
f. MOH efficiency variance
g. MOH spending variance, both fixed and variable

13. Thompson Company operates a factory. One of its departments has three kinds of employees
on its direct labor payroll, classified as pay grades A, B, and C. The employees work in 10-
person crews in the following proportions:
No. of Standard Standard
Workers in Hourly Cost per
Pay Grade Standard Crew Wage Rate Crew Hour
A 6 $4 $24
B 3 6 18
C 1 8 8

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Total 10 $50
The work crews can't work short-handed. To keep a unit operating when one of the regular
crew members is absent, the head of the department first tries to reassign one of the
department's other workers from indirect labor operations.
If no one in the department is able to step in, plant management will pull maintenance
department workers off their regular work, if possible, and assign them temporarily to the
department. These maintenance workers are all classified as Grade D employees, with a
standard wage rate of $10 an hour.

The following data relate to the operations of the department during the month of May:
1. Actual work time, 1,000 crew hours.
2. Actual direct labor hours:
Grade A, 5,400
hours. Grade B,
3,200 hours.
Grade C, 1,300 hours.
Grade D, 100 hours.
3. Standard crew hours for actual output, 980.

14. Dulock Company manufactures a certain product by mixing three kinds of materials in large
batches. The blendmaster has the responsibility for maintaining the quality of the product, and
this often requires altering the proportions of the various ingredients. Standard costs are used
to provide material control information. The standard material inputs per batch are:
Quantity Price Standard Cost
(pounds) (per pound) of Material
Material A 420 $0.06 $25.20
Material B 70 0.12 8.40
Material C 1 0 0.25 2.50
Total batch 500 $36.10

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The finished product is packed in 50-pound boxes; the standard material cost of each box is,
therefore, $3.61.
During January, the following materials were put in process:
Material A 181,000 lbs.
Material B 33,000
Material C
6,000
Total 220,000 lbs.
Inventories in process totaled 5,000 pounds at the beginning of the month and 8,000 pounds at
the end of the month. It is assumed that these inventories consisted of materials in their
standard proportions. Finished output during January amounted to 4,100 boxes.
Required: Compute the total material quantity variance for the month and break it down into
mix and yield components.

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