Ho Truong Phuong Thao ID: 1330270 Chapter 7 Assignment 14. a.

Direct material price variance = AQP* (AP-SP) = 12,800 * (0.97 0.95) = $256 unfavorable Direct material quantity variance= SP *(AQU SQU) = (10,700 35*300)*0.95 = $190 unfavorable We got total 446 unfavorable. b. Purchased department is responsible for the direct material variance while product supervisor takes the responsibility for the direct material quantity variance. c. The unfavourable price variance may happen due to the increase market price of the material. And the reason makes the increase in material quantity may be the low training workers and bad supervisors work. 15 a. Total cost of purchases for November = 0.065 * 230,000 = $14,950 b. Material price variance = AQP * (AP SP) = 230,000 * (0.065 0.070) = -$1,150 favorable c. Material quantity variance = (AQU SQU) * SP = (200,000 195,800) * 0.070 = $294 unfavorable In total, we got -$856 favorable. 17. a. Standard hours for May construction = 10 * 630 = 6,300 hours b. Labor rate variance = AQ * (AP SP) = 6,200 * (102,300/6,200 16) = 3,100 U Labor efficiency variance = (AQ SQ) * SP = (6,200 6,300) * 16 = -1,600 F We got total 1,500 U. c. Actual hourly wage is 102,300 / 6,200 = $16.5/hour 18. a. Standard quantity material allowed for November production = 2,400 * 0.5 = 1,200 square yard b. Standard direct labor allowed = 2*2,400 = 4,800 c. AQ = SQ + Material quantity variance/standard price =1,200 + 800/16 = 1,250 square yard AP = Total actual cost/total actual quantity = 20,375/1,250 = $16.3

Material price variance = (AP SP) *AQ = (16.3 16) * 1,250 = $375 U d. Labor efficiency variance = SP * (AQ SQ) = $17 * (5,000 2,400 * 2) = $3,200 U e. Standard prime cost to produce one travel bag = material standard price per bag + labor standard price per bag = 16*0.5 + 17*2 = $42/bag f. Actual cost to produce one travel bag on November = material actual price per bag + labor actual price per bag = (20,375/2,400) + (17 -650/5,000) = $43.64/bag g. The actual cost to produce one bag is 43.64 while the standard cost to produce one is 42. The difference is 1.64 included the unfavourable in material quantity variance $0.33 (800/2,400) and unfavourable in labor efficiency variance $1.42 (3,400/2400), the unfavourable material price variance $0.16 (375/2400) and finally is the favourable in labor wage variance $0.27 (650/2,400). The unfavourable variance may happen due to the poor quality of material or low trained employees 20. Case A: Standard hours = 800 3 = 2,400 Labor Rate Variance = AQ (AP - SP) 2,330(AP - $7) = -$466 AP =$6.80 Actual labor cost = $6.80 2,330 = $15,844 Labor efficiency variance = SP * (AQ - SQ) =$7*(2,330 - 2,400) = $490 F Case B: Units produced = 600/0.8 = 750 Labor Efficiency Variance = SP (AQ - SQ) SP (600 - 675) = $780 SP =$10.40 Labor Rate Variance = AQ (AP - SP) 675(AP - $10.40) =-$1,080 AP =$8.80 Actual labor cost = $8.80 675 = $5,940 Case C: Standard hours = 480 / 240 = 2 Labor Rate Variance = AQ [(4,560/ AQ) SP

AQ [($4,560/AQ) - $9.50] ]=$228 AQ =456 Labor Efficiency Variance = SP * (AQ - SQ) = $9.50* (456 - 480) = $228 F Case D: Actual labor rate = $26,812.50/4,875 = $5.50 Labor Rate Variance = AQ*(AP - SP)= 4,875($5.50 - $6) = $2,437.50 F Labor Efficiency Variance = SP*(AQ SQ $6(4,875 - SQ) )=$2,250 SQ = 4,500 Standard hours per unit = 4,500 /1,500 = 3

Units produced Standard hours per unit Standard hours Standard rate per hour Actual hours worked Actual labor cost Labor rate variance Labor efficiency variance

Case A 800 3.0 2,400 $7.0 2,330 $15,844 $466F $490F

Case B 750 0.8 600 $10.4 675 $5,940 $1,080F $780U

Case C 240 2.0 480 $9.5 456 $4,560 $228U $228F

Case D 1,500 3.0 4,500 $6.0 4,875 $26,812.5 $2,437.5F $2,250U

21. a. Four-variance approach Budgeted machine hours = 500,000/20 = 25,000 hours Applied machine hours = (500,000-10,000)/20 = 24,500 hours Actual machine hours = 24,500 -20,600/10= 22,440 VOH: VOH actual = 22,440*10 - 17,000 = 207,400

Actual VOH

VOH Rate x Actual Hours $10 22,440

Applied VOH $10 24,500 $ 245,000

$207,400

$ 224,400

$17,000 F

$20,600 F

VOH Spending Variance

VOH Efficiency Variance

$37,600 F Total VOH Variance

FOH actual = 500,000 + 14,000 = 514,000 Actual FOH Budgeted FOH $20 x 25,000 $ 514,000 $500,000 Applied FOH $20 x 24,500 $490,000

$14,000 U FOH Spending Variance

$10,000 U Volume Variance

$24,000 U Total FOH Variance

b. c. d.

Standard number of machine hours per unit = 25,000/10,000 = 2.5/unit Actual machine hours worked in May = $224,400/$10 = 22,440 Total spending variance = $17,000 - $14,000 = $3,000 F

e.The VOH favorable efficiency variance we got was the result of we saved 2,560 machine hours than the normal level which was10,000 units. The FOH volume variance came from saving 500 machine hours. f. Total OH Spending Variance VOH Efficiency Variance Volume Variance Cost of Goods Sold 22. a. Four-variance approach Standard hours = 17,600 * 0.5 = 8,800 hours Budgeted fixed overhead = 8 * 9,000 = 72,000 VOH: VOH spending variance = Actual VOH 3*8,950 = 25,900 26,850 = 950 F VOH Efficiency Variance = Applied VOH Budgeted VOH = 26,850 3*8,800 = 450 U Total VOH variance is 500 F FOH: FOH Spending variance = Actual FOH Budgeted FOH = 72,600 72,000= 600 U FOH Volume variance = Budgeted FOH Applied FOH = 72,000 8*8,800 = 1,600U Total FOH variance is 2,200 U b. Three-variance approach Total OH Spending variance = Variable OH spending variance + fixed OH spending variance Total OH Spending variance = 950 F + 600 U = 350 F VOH Efficiency Variance = Applied VOH Budgeted VOH = 26,850 3*8,800 = 450 U FOH Volume variance = Budgeted FOH Applied FOH = 72,000 8*8,800 = 1,600 U c. Two variance approach Total OH controlling variance = Variable OH spending variance + VOH Efficiency Variance + fixed OH spending variance = 950 F + 450U + 600 U =100 U FOH Volume variance = Budgeted FOH Applied FOH = 72,000 8*8,800 = 1,600 U 3,000 20,600 10,000 13,600