Concept explainers
Woodpecker manufactures sawmill equipment. They use a
A. If they used 8 pounds per blade, what would be the direct materials quantity variance?
B. If they used 7.5 pounds per blade, what would be the direct materials quantity variance?
C. Compute the direct materials price variance based on 7.5 pounds of carbide per blade actually used.
Want to see the full answer?
Check out a sample textbook solutionChapter 8 Solutions
Principles of Accounting Volume 2
Additional Business Textbook Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Financial Accounting (12th Edition) (What's New in Accounting)
Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
Cost Accounting (15th Edition)
Principles of Accounting Volume 1
- Freidrich is working with the operations manager to determine what the standard material cost is for a spice chest. He has watched the process from start to finish and taken detailed notes on what material is used. The easiest material to measure is the wood. Each chest uses 5 board feet and produces 1.5 feet of scrap. He is not sure what to do with the scrap that is produced; the company cannot buy the boards in any other dimensions. What amount of materials should be included in the standard for material costs?arrow_forwardLally, Inc. produces universal remote controls. Lally uses a JIT costing system. One of the company's products has a standard direct materials cost of $9 per unit and a standard conversion cost of $35 per unit. During January 2018, Lally produced 500 units and sold 495 units on account at $45 each. It purchased $4,800 of direct materials on the account and incurred actual conversion costs totaling $14,000. Requiremets : 1. Prepare summary jounal entries for January. 2. The January 1, 2018, balance of the Raw and In-Process inventory account was $70. Use a T - account to find the January 31 balance. 3. Use a T - account to determine wheither conversion costs are overallocated or unerallocated for the month. By how much? Prepare the journal entry to adjust the Conversion Costs account.arrow_forwardAssume that Pearle Vision uses standard costs to control the materials in its made-to-order sunglasses. The standards call for 2 ounces of material for each pair of lenses. The standard cost per ounce of material is $17.00. During July, the Santa Clara location produced 5,200 pairs of sunglasses and used 9,900 ounces of materials. The cost of the materials during July was $17.25 per ounce, and there were no beginning or ending inventories. Required a. Determine the flexible budget materials cost for the completion of the 5,200 pairs of glasses. $Answer b. Determine the actual materials cost incurred for the completion of the 5,200 pairs of glasses and compute the total materials variance. $Answer 0 actual materials cost $Answer 0 Answer F total materials variance c. How much of the total variance was related to the price paid to purchase the materials? $Answer 2,475 Answer U d. How much of the difference between the answers to requirements (a) and (b) was related to the quantity of…arrow_forward
- Delica Corportion is a contract manufacturer for the Mayon Dressing Company. Delica Corporation uses a FIFO method to account for its production of its salad dressing. All materials are added at the start of the process. Mayon provides reusable vats to Delica Corporation for the completed product to be shipped to Mayon for Bottling so Delica Corporation incurs no packaging costs. April 2010 production and cost data for Delica Corporation is as follows: Gallons of dressings in beginning inventory 36,000 Gallons transferred out during April 242,000 Gallons of dressing in ending inventory 23,500 Costs of beginning inventory: Direct materials P 180,000 Direct labor 26,100 Overhead 70,300 Costs incurred in April Direct materials P 1,131,435 Direct labor 451,728 Overhead 773,330 The beginning and ending inventories had the following stages of completion for labor and overhead:…arrow_forwardDelica Corportion is a contract manufacturer for the Mayon Dressing Company. Delica Corporation uses a FIFO method to account for its production of its salad dressing. All materials are added at the start of the process. Mayon provides reusable vats to Delica Corporation for the completed product to be shipped to Mayon for Bottling so Delica Corporation incurs no packaging costs. April 2010 production and cost data for Delica Corporation is as follows: Gallons of dressings in beginning inventory 36,000 Gallons transferred out during April 242,000 Gallons of dressing in ending inventory 23,500 Costs of beginning inventory: Direct materials P 180,000 Direct labor 26,100 Overhead 70,300 Costs incurred in April Direct materials P 1,131,435 Direct labor 451,728 Overhead 773,330 The beginning and ending inventories had the following stages of completion for labor and overhead:…arrow_forwardSpaine Manufacturing produces surfboards. The company uses a normal-costing system and allocates manufacturing overhead on the basis of direct manufacturing labor-hours. Most of the company's production and sales occur in the first and second quarters of the year. The company is in danger of losing one of its larger customers, Sofo Wholesale, due to large fluctuations in price. The owner of Spaine has requested an analysis of the manufacturing cost per unit in the second and third quarters. You have been provided the following budgeted information for the coming year: (Click the icon to view the budgeted information.) (Click the icon to view additional information.) Read the requirements. Requirement 1 and 2. Calculate the total manufacturing cost per unit for the second and third quarter assuming the company allocates manufacturing overhead costs based on the budgeted manufacturing overhead rate determined for each quarter and an annual budgeted manufacturing overhead rate. First…arrow_forward
- Splunge Manufacturing produces surfboards. The company uses a normal-costing system and allocates manufacturing overhead on the basis of direct manufacturing labor-hours. Most of the company's production and sales occur in the first and second quarters of the year. The company is in danger of losing one of its larger customers, Soho Wholesale, due to large fluctuations in price. The owner of Splunge has requested an analysis of the manufacturing cost per unit in the second and third quarters. You have been provided the following budgeted information for the coming year: E (Click the icon to view the budgeted information.) A (Click the icon to view additional information.) Read the requirements Requirement 1 and 2. Calculate the total manufacturing cost per unit for the second and third quarter assuming the company allocates manufacturing overhead costs based on the budgeted manufacturing overhead rate determined for each quarter and an annual budgeted manufacturing overhead rate. First…arrow_forwardAndrews Company manufactures a line of office chairs. Each chair takes $14 of direct materials and uses 1.9 direct labor hours at $16 per direct labor hour. The variable overhead rate is $1.20 per direct labor hour and the fixed overhead rate is $1.60 per direct labor hour. Andrews expects to have 675 chairs in ending inventory. There is no beginning inventory of office chairs. Required: Calculate the unit product cost. (Note: Round to the nearest cent.) Calculate the cost of budgeted ending inventory (Note: Round to the nearest dollar.)arrow_forwardYtze Inc. manufactures bath cubicles. The following activity information is available for its cubicles: Management is looking to remove $7.00 of activity cost from the product in order to make the price more competitive. Assume the process improvement is put in place such assembly as well as setup required one-fourth less time to complete per unit. Based on the data, identify the correct statement. a. These process improvements reduced the activity cost of each battery from $49.00 to $43.00, or $6, thus not exceeding the $7.00 target. b. These process improvements reduced the activity cost of each battery from $49.00 to $44.00, or $5, thus not exceeding the $7.00 target. c. These process improvements reduced the activity cost of each battery from $49.00 to $42.00, or $7, thus exceeding the $7.00 target. d. These process improvements reduced the activity cost of each battery from $49.00 to $41.00, or $8, thus exceeding the $7.00 target.arrow_forward
- The Tamarisk manufactures double-sided pens-a pen on one side, a highlighter on the other. As the accounting manager, Shade is responsible for presenting three different versions of the company's income statement to the rest of the management team at year- end. Team members are very familiar with absorption costing, as they have been evaluating gross margin amounts and percentages for years. They are less keen on how fixed-MOH impacts the income statement, so Shade gathers the following current information. The information includes three possible capacity levels for calculating the fixed-MOH rate. Shade also notes there are no price or efficiency variances this period. Any fixed-MOH volume variance is written off to COGS. Theoretical level Practical level Normal level Actual production Sales volume Budgeted fixed-MOH cost Budgeted DM cost Budgeted DL cost Budgeted variable-MOH cost Selling price (a) Theoretical Practical Normal 93,000 units $ 55,800 units Your answer is partially…arrow_forwardDK manufactures three products, W, X and Y. Each product uses the same materials and the same type of direct labour but in different quantities. The company currently uses a cost-plus basis to determine the selling price of its products. This is based on full cost using an overhead absorption rate per direct labour hour. However, the managing director is concerned that the company may be losing sales because of its approach to setting prices. He thinks that a marginal costing approach may be more appropriate, particularly since the workforce is guaranteed a minimum weekly wage and has a three month notice period.arrow_forwardMcClellan Recreation manufactures and sells two models of paddle boards: Starter and Pro. The Starter model is a basic board used for instruction and purchased by novices. The Pro model is made with premium materials and comes with several accessories. The boards are produced to order, and there are no inventories at the end of the year. The cost accounting system at McClellan allocates overhead to products based on direct labor cost. Overhead in year 1, which just ended, was $2,536,800. Data on units sold for year 1 along with the unit sales price and unit direct costs for the two models follow: Sales price per unit Direct materials per unit Direct labor per unit Required: a. Compute product line profits or loss for the Starter model and the Pro model for year 1. b. A study of overhead shows that without the Starter model, overhead would fall to $1,442,000. Assume all other revenues and costs would remain the same for the Pro model in year 2. Compute product line profits for the Pro…arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College