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Chapter 23: Q18RQ (page 1305)
List the eight product variances and the manager most likely responsible for each.
The purchasing manager looks after the materials cost and the labor cost by the human resource manager. The production manager looks after efficiency variances and variable and fixed overhead variances.
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Explain the difference between a favorable and an unfavorable variance.
Briefly describe how journal entries differ in a standard cost system.
Computing standard cost variances and reporting to management
Hear Smart manufactures headphone cases. During September 2018, the company produced and sold 105,000 cases and recorded the following cost data:
Standard Cost Information
Quantity | Cost | |
Direct Materials | 2 parts | \( 0.15 per part |
Direct Labor | 0.02 hours | 8.00 per hour |
Variable Manufacturing Overhead | 0.02 hours | 10.00 per hour |
Fixed Manufacturing Overhead (\)28,500 for static budget volume of 95,000 units and 1,900 hours, or \(15 per hour) |
Actual Cost Information
Direct Materials (209,000 parts @ \)0.20 per part) \( 41,800 Direct Labor (1,600 hours @ \)8.15 per hour) 13,040 Variable Manufacturing Overhead 9,000 Fixed Manufacturing Overhead 26,000 |
Requirements
1. Compute the cost and efficiency variances for direct materials and labor.
2. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances.
3. Hear Smart鈥檚 management used better quality materials during September. Discuss the tradeoff between the two direct material variances.
Question:Top managers of Marshall Industries predicted 2018 sales of 14,800 units of its product at a unit price of \(9.50. Actual sales for the year were 14,600 units at \)12.00 each. Variable costs were budgeted at \(2.00 per unit, and actual variable costs were \)2.10 per unit. Actual fixed costs of \(48,000 exceeded budgeted fixed costs by \)4,000.
Prepare Marshall鈥檚 flexible budget performance report. What variance contributed most to the year鈥檚 favorable results? What caused this variance?
Question: List the variable overhead variances, and briefly describe each
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