Acc 327

Test II
Spring 2015
Dr. R. Chen

Name:

1) The following data for the Panoid Garden Supplies Company pertains to the production of 2,000
garden spades during March. The spade consists of a wooden handle and a metal forged tool that comes
in contact with the ground.
Direct Materials (all materials purchased were used):
Standard cost: $1.00 per handle and $3.00 per metal tool.
Total actual cost: $9,000.
Materials flexible-budget efficiency variance was $500 unfavorable.
Direct Manufacturing Labor:
Standard cost is 5 garden spades per hour at $20.00 per hour.
Actual cost per hour was $21.00.
Labor efficiency variance was $500 favorable.
Required:
a. What is the standard direct material amount per garden spade?
b. What is the standard cost allowed for all units produced?
c. What is the total direct materials flexible-budget variance?
d. What is the direct material flexible-budget price variance?
e. What is the total actual cost of direct manufacturing labor?
f. What is the labor price variance for direct manufacturing labor?

2. Waddell Productions makes separate journal entries for all cost accounting-related activities. It uses a
standard cost system for all manufacturing items. For the month of June, the following activities have
taken place:
Direct Manufacturing Materials Purchased
Direct Manufacturing Materials Used
Direct Materials Price Variance
(at time of purchase)
Direct Materials Efficiency Variance
Direct Manufacturing Labor Price Variance
Direct Manufacturing Labor Efficiency Variance
Direct Manufacturing Labor Payable

$300,000
250,000
10,000 unfavorable
15,000 favorable
6,000 favorable
4,000 favorable
170,000

Required:
Record the necessary journal entries to close the accounts for the month.

3. Different management levels in Bates, Inc., require varying degrees of managerial accounting
information. Because of the need to comply with the managers' requests, four different variances for
manufacturing overhead are computed each month. The information for the September overhead
expenditures is as follows:
Budgeted output units
Budgeted fixed manufacturing overhead
Budgeted variable manufacturing overhead
Budgeted direct manufacturing labor hours
Fixed manufacturing costs incurred
Direct manufacturing labor hours used
Variable manufacturing costs incurred
Actual units manufactured

3,200 units
$20,000
$5 per direct labor hour
2 hours per unit
$26,000
7,200
$35,600
3,400

Required:
a. Compute a 4-variance analysis for the plant controller.
b. Compute a 3-variance analysis for the plant manager.
c. Compute a 2-variance analysis for the corporate controller.

4) Aspen Popular Company prepared the following absorption-costing income statement for the year
ended May 31, 2015.
Sales (8,000 units)
Cost of goods sold
Gross margin
Selling and administrative expenses
Operating income

$160,000
108,000
$52,000
18,000
$ 34,000

Additional information follows:

Selling and administrative expenses include $1.50 of variable cost per unit sold. There was no beginning
inventory, and 8,750 units were produced. Variable manufacturing costs were $11 per unit. Actual fixed
costs were equal to budgeted fixed costs
Required:
Prepare a variable-costing income statement for the same period.

5. The management accountant for the Chocolate S'more Company has prepared the following income
statement for the most current year:
Chocolate
Sales
$40,000
Cost of goods sold
26,000
Contribution margin
14,000
Delivery and ordering costs
2,000
Rent (per sq. foot used)
3,000
Allocated corporate costs
5,000
Corporate profit
$4,000

Other Candy
$25,000
15,000
10,000
3,000
3,000
5,000
$(1,000)

Fudge
$35,000
19,000
16,000
2,000
2,000
5,000
$7,000

Total
$100,000
60,000
40,000
7,000
8,000
15,000
$10,000

a. Do you recommend discontinuing the Other Candy product line? Why or why not?
b. If the Chocolate product line had been discontinued, corporate profits for the current year would have
decreased by what amount?