Data for the Faukner Manufacturing Company for the month of July 2002 are as follows:

Beginning Work in Process Inventory

Units 800
Direct material costs $21,000
Conversion costs $4,500

Production during the period

Units started 17,000
Direct material costs $654,500
Conversion costs $350,250

Ending Work in Process Inventory

Units 2,000

As far as Conversion Costs are concerned, the beginning work in process inventory was
65 percent complete, and the ending work in process inventory 75 percent complete. As
far as the Direct Materials Costs are concerned all units are 100 procent complete. The
company uses the FIFO costing method.

Question 9 6 points:

Calculate the equivalent units for the various cost categories. In other words, prepare a
schedule of equivalent production.

DM CC
B 0.35*800
S&C 15,000 15,000
E 2,000 0.75*2,000

Equivalent
units 17,000 16,780

Question 10 5 points:

Calculate the cost per equivalent unit for the various cost categories. In other words,
prepare a unit cost analysis schedule.

= 654,500/17,000 + 350,250/16,780 = 38.5 + 20.87 = 59.3731

Question 11 6 points:

Calculate the value of the ending work in process inventory.

= 2,000*38.5 + 0.75*2,000*20.87 = 108,305

Mannon-Brantoom, Inc, produces a minibar. Standards per bar are as follows:

Direct material is 5 kilo at $ 3.5 per kilo,

Direct labour is 2 hours at $ 30 per hour
Variable overhead is $ 1.5 per direct labour hour
Fixed Manufacturing Overhead is $ 10 per direct labour hour.
Normal capacity per month is 2,000,000 bars.

For July 2003 the company expects to produce and sell 1,900,000 bars. The actual data
for July are as follows: Production 1,945.000, Direct materials 9,624,000 kilo used at a
total cost of $ 36,056,000, Direct labour 3,850,000 hours at a total cost of $
123,000,000, Variable Manufacturing overhead $ 5,915,000, and Fixed Manufacturing
overhead $ 37,900,000.

Question 17 3 points:

Calculate the budgeted Total Fixed Overhead Costs per month.

$10*4,000,000

Question 18 9 points:

Calculate the Materials Variances (price, quantity and total) and give possible causes for
those variances.

Price = (-36,056,000 + 3.5*9,624,000) = -2,372,000

Quantity = (-3.5*9,624,000 + 3.5*5*1,945,000) = 353,500
Total = -2,018,500

Question 19 9 points:
Calculate the Labour Variances (rate, efficiency and total) and give possible causes for
those variances.

Rate = -123,000,000 + 30*3,850,000 = -7,500,000

Efficiency = -30*3,850,000 + 30*2*1,945,000 = 1,200,000
Total = -6,300,000
Answers:

Q9 DM CC B 0 .35*800
S&C 15,000 15,000 E 2,000 0.75*2,000Equivalent
units 17,000 16,780

Question 10
654,500/17,000 + 350,250/16,780 = 38.5 + 20.87 = 59.3731

Question 11
2,000*38.5 + 0.75*2,000*20.87 = 108,305

Question 12
B 25,500 + 0.35*800*20.87; S&C 15,000*59.3731; total 921,940.10Q13 First-in
First-out: units started first are completed first.Part C no longer part of exam
materialPart D:Q17 $10*4,000,000

Question 18
Price = -36,056,000 + 3.5*9,624,000 = - 2,372,000Quantity = -3.5*9,624,000 +
3.5*5*1,945,000 = 353,500Total = - 2,018,500

Question 19
Rate = -123,000,000 + 30*3,850,000 = -7,500,000
Efficiency = -30*3,850,000 + 30*2*1,945,000 = 1,200,000
Total = -6,300,000

Question 20
(for variable overhead you need to know the following two)
Spending = -5,915,000 + 1.5*3,850,000 = -140,000
Efficiency = -1.5*3,850,000 + 1.5*2*1,945,000 = 60,000
Total = -80,000