Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis
Mackinaw Inc. processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 74,000 units of product were as follows:
| Standard Costs | Actual Costs | |
|---|---|---|
| Direct materials | 251,600 lbs. at $5.40 | 249,100 lbs. at $5.20 |
| Direct labor | 18,500 hrs. at $17.30 | 18,930 hrs. at $17.70 |
| Factory overhead | Rates per direct labor hr., | |
| based on 100% of normal | ||
| capacity of 19,310 direct | ||
| labor hrs.: | ||
| Variable cost, $4.80 | $87,910 variable cost | |
| Fixed cost, $7.60 | $146,756 fixed cost |
Each unit requires 0.25 hour of direct labor.
Required:
a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using minus sign and an unfavorable variance as a positive number.
Direct Materials Price Variance
Direct Materials Quantity Variance
Total Direct Materials Cost Variance
b. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sig and an unfavorable variance as a positive number.
Direct Labor Rate Variance
Direct Labor Time Variance
Total Direct Labor Cost Variance
c. Determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Variable factory overhead controllable variance
Fixed factory overhead volume variance
Total factory overhead cost variance
In: Accounting
Beta Industries is considering a project with an initial cost of $6.9 million. The project will produce cash inflows of $1.52 million a year for seven years. The firm uses the subjective approach to assign discount rates to projects. For this project, the subjective adjustment is +2.2 percent. The firm has a pretax cost of debt of 9.1 percent and a cost of equity of 17.7 percent. The debt-equity ratio is .57 and the tax rate is 34 percent. What is the net present value of the project? (Round the answer to the nearest $100.)
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$2,500 |
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-$698,400 |
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-$187,100 |
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$48,200 |
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$333,300 |
In: Finance
In: Accounting
A Company manufactures a product A. The company estimates the cost function for the total costs. The cost driver is number of units. The following informations were collected:
Month Units Total Costs
January 3,560 $242,400
February 3,800 $252,000
March 4,000 $260,000
April 3,600 $244,000
May 3,200 $228,000
June 3,040 $221,600
Compute a cost function using the high-low method.
In: Accounting
In: Finance
Corporation has a project with the initial cost of $150. It will generate the cash flows of $50, $100, and $150 in years 1, 2 and 3, respectively, which is the internal rate of return (IRR) of project?
In: Finance
In: Finance
Your company is considering a machine that will cost $ 4,520 at Time 0 and which can be sold after 3 years for $ 872 . To operate the machine, $ 490 must be invested at Time 0 in inventories; these funds will be recovered when the machine is retired at the end of Year 3. The machine will produce sales revenues of $ 1,178 /year for 3 years; variable operating costs (excluding depreciation) will be 41 percent of sales. Operating cash inflows will begin 1 year from today (at Time 1). The machine is in the 3-year MACRS class. The MACRS class has depreciation of 33% in year 1, 45% in year 2, 15% in year 3, and 7% in year 4. The company has a 31 percent tax rate, enough taxable income from other assets to enable it to get a tax refund from this project if the project's income is negative, and a 10 percent cost of capital. Inflation is zero. What are the terminal cash flows associated with ending this project? Note, I want only the Year 3 terminal cash flows, not the year 3 operating cash flows. Show your answer to the nearest $.01 Do not use the $ symbol in your answer
In: Finance
Which of the following statement is NOT correct?
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12b-1 Fee is not a trading cost for investors when trading common stocks |
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Mutual funds investors pay taxes on capital gain and dividends |
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None of the above |
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Price Impact is not a trading cost for investors when trading common stocks |
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There is a decrease in number of IPOs after 2000 |
In: Finance
Beta purchased a computer at a cost of $ 75,000. To finance the purchase, he signed a five-year promissory note, which requires five equal annual payments. Beta will make the first payment in a year. Each payment will be in the amount of $ 20,293.
a. Determine the interest rate on this note.
b. Prepare the wage entries Beta will do for the first payment and for the last payment.
c. Suppose that immediately after making the second payment, Beta refinances and signs a new three-year note for the amount owed on the first note and the interest rate is 9%, how much will be the annual payment on the new note.
In: Finance