Question

CHAP 22:

Q1:

Tip Top Corp. produces a product that requires 12 standard gallons per unit. The standard price is $3.5 per gallon. If 4,100 units required 51,200 gallons, which were purchased at $3.36 per gallon, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

a. Direct materials price variance	$
b. Direct materials quantity variance	$
c. Direct materials cost variance	$

Q2:

Tip Top Corp. produces a product that requires 5 standard hours per unit at a standard hourly rate of $13 per hour. If 2,000 units required 10,400 hours at an hourly rate of $13.52 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

a. Direct labor rate variance	$
b. Direct labor time variance	$
c. Direct labor cost variance	$

Q3:

Tip Top Corp. produced 4,900 units of product that required 5.5 standard hours per unit. The standard variable overhead cost per unit is $2.2 per hour. The actual variable factory overhead was $60,650. Determine the variable factory overhead controllable variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
$

Q4:

Tip Top Corp. produced 3,500 units of product that required 6.5 standard hours per unit. The standard fixed overhead cost per unit is $0.643 per hour at 20,450 hours, which is 100% of normal capacity. Determine the fixed factory overhead volume variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
$

Q5:

I-Time, Inc., produces electronic timepieces. The company uses mini-LCD displays for its products. Each timepiece uses one display. The company produced 450 timepieces during October. However, due to LCD defects, the company actually used 470 LCD displays during October. Each display has a standard cost of $6.7. The company purchased 470 LCD displays for October production at a cost of $2,810.

Determine the price variance, quantity variance, and total direct materials cost variance for October.

Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Price variance	$
Quantity variance	$
Total direct materials cost variance	$

Q6:

Alpine Bicycle Company manufactures road bikes. The following data for September of the current year are available:

Quantity of direct labor used	680 hrs.
Actual rate for direct labor	$12 per hr.
Bicycles completed in September	320
Standard direct labor per bicycle	2 hrs.
Standard rate for direct labor	$12.2 per hr.

a. Determine the direct labor rate variance and direct labor time variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Rate variance	$
Time variance	$
Total direct labor cost variance	$

b. How much direct labor should be debited to Work in Process?
$

Answer 1

Material Price Variance	7168 (F)
Material Quantity Variance	7000 (U)
Material Cost Variance	168(F)

(1 a) Material Price Variance = (AR – SR) * AQ

AR = 3.36

SR = 3.5

AQ = 51200

= (3.36 – 3.5) * 51200 = 7168 (F)

(1b) Material Quantity Variance = (AQ – SQ) * SR

SQ = 4100 * 12 = 49200

= (51200 – 49200) * 3.5 = 7000 (U)

(1c) Material Cost Variance = MPV + MQV

= 7168(F) + 7000(U) = 168(F)

(2)

a. Direct labor rate variance	5408 (U)
b. Direct labor time variance	5200 (U)
c. Direct labor cost variance	10608 (U)

(a) Direct Labour Rate Variance = (AR – SR) * A. Hrs

     AR = 13.52

SR = 13

A.Hrs = 10400

(13.52 – 13) * 10400 = 5408 (U)

(b) Direct labor time variance = (A. Hrs – S. Hrs) * SR

S. Hrs = 2000 * 5 = 10000

(10400 – 10000) * 13 = 5200 (U)

(c) Direct labor cost variance = LRV + LTV

    = 5408(U) + 5200(U) = 10608 (U)

(3) Variable factory overhead controllable variance = Actual O/H – Standard O/H

Actual O/H =60650

Standard = 4900 units * 5.5 hours * 2.2 = 59290

= 60650 – 59290 = 1360 (U)

(4) Fixed factory overhead volume variance = Budgeted O/H - Overhead Absorbed

Budgeted = 20450 hrs * 0.643 = 13277.95

Absorbed = 3500 units * 6.5 hrs * 0.643 = 14628.25

= 13277.95 - 14628.25 = 1350.3 (F)

(5)

Price variance	339(F)
Quantity variance	134(U)
Total direct materials cost variance	205(F)

Material Price Variance = (AR – SR) * AQ

AR = 2810/470 = 5.9787

SR = 6.7

AQ = 470

= (5.9787 – 6.7) * 470 = 339 (F)

Material Quantity Variance = (AQ – SQ) * SR

SQ = 450

(470 – 450) * 6.7 = 134 (U)

Total direct materials cost variance = Price variance + Quantity variance

    = 339(F) + 134 (U) = 205 (F)

(6)

Time Variance	136 (F)
Time variance	488(U)
Total direct labor cost variance	352(U)

Rate Variance = (AR – SR) * A. Hrs

AR = 12

SR = 12.2

A.Hrs = 680 hrs

(12 – 12.2) * 680 = 136 (F)

Time Variance = (A.Hrs – S.Hrs) * SR

S.Hrs = 320 * 2 hrs = 640 hrs

(680 – 640) * 12.2 = 488 (U)

Total direct labor cost variance = Time Variance + Time variance

= 136 (F) + 488(U) = 352 (U)

(b) = Amount debited to WIP = 640 * 12.2 = 7808