You are on page 1of 17

Standard Costing

Jeremy Peh
Vanessa Lam
Yeo Jing Wen

Exercise 12-16 (1a)

Actual Quantity
X
Actual Price

Actual Quantity
X
Standard Price

Standard
Quantity
X
Standard Price

12000 x 1.8
X
$3.30

12000 x 1.8
X
$3.00

12000 x 1.8
X
$3.00

$71,280

$64,800

$64,800

Price Variance
$6,480 U

Quantity Variance
0

Exercise 12-16 (1b)

Actual Hours
X
Actual Rate

Actual Hours
X
Standard Rate

Standard Hours
X
Standard Rate

12000 x 0.92
X
$17.50

12000 x 0.92
X
$18.00

12000 x 0.9
X
$18.00

$193,200

$198,720

$194,400

Rate Variance
$5,520 F

Efficiency Variance
$4,320 U

Exercise 12-16 (1c)

Actual Hours
X
Actual Rate

Actual Hours
X
Standard Rate

Standard Hours
X
Standard Rate

12000 x 0.92
X
$4.50

12000 x 0.92
X
$5.00

12000 x 0.9
X
$5.00

$49,680

$55,200

$54,000

Variable Overhead
Rate Variance
$5,520 F

Variable Overhead
Efficiency Variance
$1,200 U

Exercise 12-16 (2)

Direct Materials: Total


Quantity variance
Price variance

Per Unit
$0
6480 U

$0
0.54 U

4320 U
5520 F

0.36 U
0.46 F

1200 U
5520 F

0.10 U
0.46 F

960 U

0.08 U

Direct Labor:
Efficiency variance
Rate variance

Variable overhead:
Efficiency variance
Rate variance
Excess of actual over
standard cost per unit

Exercise 12-16 (3)

Labour Efficiency Variance


Variable Overhead Efficiency Variance

$0.36U
0.10U $0.46U

Exercise 12-16 (4)

Excess unit cost in this case is within the 2% percent limit the
management has set for acceptable variances. However, the
materials price and quantity variance, labour rate and
efficiency variance as well as the variable overhead rate and
efficiency variance might not be within the 2 percent limit.

In this case, the excess unit cost will be of concern to the


management. The managers should exercise management by
exception and evaluate the reasons behind the deviation from
the standard price and standard quantity set for each variance
as computed in part 1.
In addition, if the unfavourable variance is recurring, it will
mean that the standard set is wrong and management should
re-evaluate the standard price/rate and standard
quantity/hours of the product

Exercise 12A-4 (1)

POHR=

Budgeted mfg overhead cost


.
Estimated total amt of allocation base
= 300,000 + 3(60,000)
60,000
= $8/machine hour

Variable OH cost = $3/ machine hour


Fixed OH cost= 300,000
60,000
= $5/ machine hour

Exercise 12A-4 (2)

Budgeted units of production= 40,000


Standard machine hours= 60,000
Standard hours per unit= 60,000/40,000
= 1.5 hours/ unit
Standard hours allowed for production
= 1.5 x 42,000
= 63,000

Exercise 12A-4 (3)

Actual variable
overhead
incurred
(AH X AR)

Flexible budget
for overhead at
actual hours
(AH X SR)

Flexible budget
for overhead at
standard hours
(SH x SR)

$185,600

64,000
X
$3.00
$192,000

63,000
X
$3.00
$189,000

Variable Overhead
Rate Variance
$6,400 F

Variable Overhead
Efficiency Variance
$3,000 U

Exercise 12A-4 (3)

Actual Fixed
Overhead

$302,400

Fixed Overhead
Budget Variance
$2,400 U

Budgeted Fixed
Overhead

$300,000

Fixed Overhead
Applied to WIP
(POHR x SQ)

1.5 x 42000
X
$5.00
$320,000

Variable Overhead
Efficiency Variance
$15,000

Exercise 12B-2 (1a)

Actual Quantity
X
Actual Price

Actual Quantity
X
Standard Price

Standard Quantity
X
Standard Price

10000
X
$13.80

10000
X
$14.00

12000 x 1.8
X
$3.00

$138,000

$140,000

$64,800

8000
X
$14.00

3000 x 2.5
X
$14.00

$112,000

$105,000

Price Variance
$2,000 F

Quantity Variance
$7,000 U

Exercise 12B-2 (1b)


.

To record the purchase of materials


Debit
Raw Materials

Credit

140,000

Direct Materials
Price Variance

2000

Account Payable

138000

To record use of materials


Debit

Credit

Work In progress 105000


Direct Materials 7000
Quantity Variance
Raw Material

112000

Exercise 12-B-2 (2a)

Actual Hours
X
Actual Rate

$43,000

Rate Variance
$3,000 U

Actual Hours
X
Standard Rate

Standard Hours
X
Standard Rate

5000
X
$8.00

3000 x 1.6
X
$8.00

$40,000

$38,400

Efficiency Variance
$1,600 U

Exercise 12B-2 (2b)


To record the incurrence of direct labour cost
Debit

Work In Process

Credit

38,400

Direct labour rate 3,000


variance
Direct labour
1,600
efficiency variance
Wages Payable

43,000

Exercise 12B-2 (3)

Raw materials
140,000

112,000

Balance:
28,000

Work in Process
105,000
38,400

Account Payable

Wages Payable

138,000

Material Price
Variance
2,000
Labour Rate Variance
3,000

43,000

Material Quantity
Variance

7,000
Labour Efficiency
Variance

1,600

Thank You

You might also like