Sole Purpose Shoe Company is owned and operated by Sarah Charles. The company manufactures casual shoes, with manufacturing facilities in your state. Sarah began the business this year, and while she has a great deal of experience in manufacturing popular and comfortable shoes, she needs some help in evaluating her results for the year, and asks for your help.
Starting Questions
Sarah’s first questions for you have to do with the general ideas and terminology used to evaluate variances.
Provide answers to the following questions (1)-(3).
1. Why might Sarah want to use A detailed estimate of what a product should cost.standard costs to compare with her actual costs?
a. Standard costs give management a cost structure for products that is applicable for the entire life of the business.
b. Standard costs allow management to motivate employees by comparing their performance to what it would be under perfect conditions.
c. Management can evaluate the differences between standard costs and actual costs to focus on correcting the The differences between actual and standard costs.cost variances.
2. What are some possible drawbacks to using standard costs that Sarah might consider?
a. Standards limit operating improvements because employees may be discouraged from improving beyond the standards.
b. Standards may become “stale” in a dynamic manufacturing environment.
c. Employees may focus only on efficiency improvement and their own operations rather than considering the larger objectives of the organization.
d. Since standards are impossible to attain, they are a distraction from the work at hand.
e. Since standards never change, they do not reflect reality.
3. Sarah wants to be sure she understands the basic definitions involved:
Answer the following questions by selecting the correct words.
A favorable variance occurs when the actual cost (what the product does cost) is
An unfavorable variance occurs when the actual cost (what the product does cost) is
Direct Materials
Under normal conditions, Sarah spends $8.40 per unit of materials, and it will take 3.60 units of material per pair of shoes. During July, Sole Purpose Shoe Company incurred actual direct materials costs of $63,101 for 7,090 units of direct materials in the production of 2,200 pairs of shoes.
Complete the following table, showing the direct materials variance relationships for July for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a A variance that occurs when the actual cost is less than standard cost.favorable cost variance, and a positive number for an A variance that occurs when the actual cost exceeds the standard cost.unfavorable cost variance.
| Actual Cost | Standard Cost | |||||||||
| Actual Quantity |
X | Actual Price |
Actual Quantity |
X | Standard Price |
Standard Quantity |
X | Standard Price |
||
| X | $ | X | $ | X | $ | |||||
| = $ | = $ | = $ | ||||||||
|
|
|||||||||
| $ | $ | |||||||||
|
||||||||||
| $ | ||||||||||
Direct Labor
Under normal conditions, Sarah pays her employees $8.50 per hour, and it will take 2.80 hours of labor per pair of shoes. During August, Sole Purpose Shoe Company incurred actual direct labor costs of $65,340 for 7,260 hours of direct labor in the production of 2,100 pairs of shoes.
Complete the following table, showing the direct labor variance relationships for August for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a favorable variance, and a positive number for an unfavorable variance.
| Actual Cost | Standard Cost | |||||||||
| Actual Hours |
X | Actual Rate |
Actual Hours |
X | Standard Rate |
Standard Hours |
X | Standard Rate |
||
| X | $ | X | $ | X | $ | |||||
| = $ | = $ | = $ | ||||||||
|
|
|||||||||
| $ | $ | |||||||||
|
||||||||||
| $ | ||||||||||
Budget Performance Report
Sarah has learned a lot from you over the past two months, and has compiled the following data for Sole Purpose Shoe Company for September using the techniques you taught her. She would like your help in preparing a A report that summarizes actual costs, standard costs, and the differences for the units produced.Budget Performance Report for September. The company produced 3,000 pairs of shoes that required 10,500 units of material purchased at $8.20 per unit and 8,100 hours of labor at an hourly rate of $8.90 per hour during the month. Actual factory overhead during September was $24,300. When entering variances, use a negative number for a favorable cost variance, and a positive number for an unfavorable cost variance.
Use the data in the following table to prepare the Budget Performance Report for Sole Purpose Shoe Company for September.
Manufacturing Costs |
Standard Price |
Standard Quantity |
Standard Cost Per Unit |
| Direct materials | $8.40 per unit | 3.60 units per pair | $30.24 |
| Direct labor | $8.50 per hour | 2.80 hours per pair | 23.80 |
| Factory overhead | $2.70 per hour | 2.80 hours per pair | 7.56 |
| Total standard cost per pair | $61.60 |
| Sole Purpose Shoe Company Budget Performance Report For the Month Ended September 30 |
|||
Manufacturing Costs |
Actual Costs |
Standard Cost at Actual Volume |
Cost Variance - (Favorable) Unfavorable |
| Direct materials | $ | $ | $ |
| Direct labor | |||
| Factory overhead | |||
| Total manufacturing costs | $ | $ | $ |
Final Questions
Before Sarah makes any changes based on the Budget Performance Report for September, she wants to be sure she understands the results, and has the following questions for you.
Answer the following questions (1) and (2). All questions pertain to the September data.
1. What caused the total cost variance for direct materials?
a. The actual quantity of direct materials per unit was less than the standard quantity.
b. The actual price for direct materials per unit was less than the standard price.
c. The favorable price variance dominated the unfavorable quantity variance, causing the total cost variance for direct materials to be favorable.
d. The unfavorable quantity variance dominated the favorable price variance, causing the total cost variance for direct materials to be unfavorable.
e. A factor other than those listed caused the total cost variance for direct materials.
2. What caused the total cost variance for direct labor?
a. The actual number of labor hours per unit was less than the standard number.
b. The unfavorable rate variance was larger than the favorable time variance, causing the total cost variance for direct labor to be unfavorable.
c. The favorable time variance was larger than the unfavorable rate variance, causing the total cost variance for direct labor to be favorable.
d. The actual rate for labor hours per unit was less than the standard rate.
e. A factor other than those listed caused the total cost variance for direct labor.
In: Accounting
Smithson Company uses a job-order costing system and has two manufacturing departments—Molding and Fabrication.
The company provided the following estimates at the beginning of the year:
Machine Hours Molding Fabrication Total
22,000 32,000 54,000
Fixed manufacturing overhead costs $ 780,000 $ 230,000 $ 1,010,000
Variable manufacturing overhead per machine-hour $ 5.00 $ 5.00
During the year, the company had no beginning or ending inventories and it started, completed, and sold only two jobs—Job D-75 and Job C-100. It provided the following information related to those two jobs:
Job D-75:
Molding Fabrication Total Direct
materials cost $ 377,000 $ 324,000 $ 701,000
Direct labor cost $ 230,000 $ 160,000 $ 390,000
Machine-hours 16,000 6,000 22,000
Job C-100:
Molding Fabrication Total Direct
materials cost $ 290,000 $ 250,000 $ 540,000
Direct labor cost $ 160,000 $ 240,000 $ 400,000
Machine-hours 6,000 26,000 32,000
Smithson had no overapplied or underapplied manufacturing overhead during the year. Assume Smithson uses a plantwide overhead rate based on machine-hours.
Required:
1-a. Compute the predetermined plantwide overhead rate. (Round your answer to 2 decimal places.)
1-b. Compute the total manufacturing costs assigned to Job D-75 and Job C-100. (Round your intermediate calculations to 2 decimal places.)
1-c. If Smithson establishes bid prices that are 120% of total manufacturing costs, what bid price would it have established for Job D-75 and Job C-100? (Round your intermediate calculations to 2 decimal places.)
1-d. What is Smithson’s cost of goods sold for the year? (Round your intermediate calculations to 2 decimal places.)
In: Accounting
Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 167,200 units at a price of $111 per unit during the current year. Its income statement is as follows: Sales $18,559,200 Cost of goods sold 6,586,000 Gross profit $11,973,200 Expenses: Selling expenses $3,293,000 Administrative expenses 1,961,000 Total expenses 5,254,000 Income from operations $6,719,200 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $1,665,000 in yearly sales. The expansion will increase fixed costs by $222,000, but will not affect the relationship between sales and variable costs. Required:
1. Determine the total variable costs and the total fixed costs for the current year.
Total variable costs $ NEED THIS - please show work
I have the total fixed cost so I do not need that.
2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.
Unit variable cost $ NEED THIS - please show work
Unit contribution margin $ NEED THIS - please show work
3. Compute the break-even sales (units) for the current year.
NEED THIS - please show work
4. Compute the break-even sales (units) under the proposed program for the following year.
NEED THIS - please show work
5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $6,719,200 of income from operations that was earned in the current year. units
NEED THIS - please show work
6. Determine the maximum income from operations possible with the expanded plant.
NEED THIS - please show work
In: Accounting
Delph Company uses a job-order costing system and has two manufacturing departments—Molding and Fabrication. The company provided the following estimates at the beginning of the year:
| Molding | Fabrication | Total | ||||
| Machine-hours | 24,000 | 34,000 | 58,000 | |||
| Fixed manufacturing overhead costs | $ | 790,000 | $ | 250,000 | $ 1,040,000 | |
| Variable manufacturing overhead per machine-hour | $ | 5.80 | $ | 5.80 | ||
|
During the year, the company had no beginning or ending inventories and it started, completed, and sold only two jobs—Job D-70 and Job C-200. It provided the following information related to those two jobs: |
| Job D-70: | Molding | Fabrication | Total | |||
| Direct materials cost | $ | 375,000 | $ | 326,000 | $ | 701,000 |
| Direct labor cost | $ | 200,000 | $ | 140,000 | $ | 340,000 |
| Machine-hours | 15,000 | 9,000 | 24,000 | |||
| Job C-200: | Molding | Fabrication | Total | |||
| Direct materials cost | $ | 200,000 | $ | 230,000 | $ | 430,000 |
| Direct labor cost | $ | 170,000 | $ | 260,000 | $ | 430,000 |
| Machine-hours | 9,000 | 25,000 | 34,000 | |||
|
Delph had no overapplied or underapplied manufacturing overhead during the year. |
||||||
| Assume Delph uses a plantwide overhead rate based on machine-hours. |
| Required: |
| 1-a. |
Compute the predetermined plantwide overhead rate. (Round your answer to 2 decimal places.) |
| 1-b. |
Compute the total manufacturing costs assigned to Job D-70 and Job C-200. (Round your intermediate calculations to 2 decimal places.) |
| 1-c. |
If Delph establishes bid prices that are 130% of total manufacturing costs, what bid price would it have established for Job D-70 and Job C-200? (Round your intermediate calculations to 2 decimal places.) |
| 1-d. |
What is Delph’s cost of goods sold for the year? (Round your intermediate calculations to 2 decimal places.) |
In: Accounting
Process Costing – Packaging Department (Refer to Information 9)
Direct materials are added 90% at the beginning of the process and the remaining 10% are added when the cereal is 50% complete with the packaging process. Direct labor and overhead are added evenly throughout the process at the completion rate of the cereals.
Table 8 – Unit and cost information (Do not attempt to complete this table; it is for information only)
|
Cost |
|||||
|
Physical Units |
Transferred-in |
Direct Materials |
Direct Labor |
Overhead |
|
|
Beg WIP |
4,000 (40% complete) |
$15,000 |
$720 |
$282.78 |
$160 |
|
Transferred In |
38,231 |
$139,569.12 |
|||
|
End WIP |
4,200 (30% complete) |
||||
Added during Qtr. 1:
Direct Materials -- $9,733
Direct Labor – 790 hours @ $11.00 per hour
Overhead – OH is applied based on predetermined OH rate and actual DL hours
1. Determine the number of units completed during quarter 1.
(Formula to be used: Beginning WIP + Transferred in = Units completed + Ending WIP)
4,000+38,231= units completed + 4,200
Units completed = 38,031 units
2. Compute the equivalent units using the weighted average method.
(Formula: Equivalent units = physical units x percentage of completion)
|
Transferred in |
DM |
Conversion |
|
|
Units completed |
38,031 |
||
|
Ending inventory |
|||
|
Total equivalent units |
3. Compute the cost per equivalent unit using the weighted average method.
|
Total |
Transferred in |
DM |
CC |
|
|
Beginning WIP |
||||
|
Costs Added in Quarter 1 |
||||
|
Total cost |
||||
|
Total equivalent units |
||||
|
Costs per equivalent units |
4. Compute the cost of goods transferred to finished goods inventory
Costs of goods transferred = number of completed goods x total equivalent costs per unit
5. Compute the ending balance in WIP, Packaging
In: Accounting
In its Department R, Recyclers, Inc., processes donated scrap cloth into towels for sale in local thrift shops. It sells the products at cost. The direct materials costs are zero, but the operation requires the use of direct labor and overhead. The company uses a process costing system and tracks the processing volume and costs incurred in each period. At the start of the current period, 500 towels were in process and were 60 percent complete. The costs incurred were $1,780.
During the month, costs of $20,150 were incurred, 3,100 towels were started, and 250 towels were still in process at the end of the month. At the end of the month, the towels were 20 percent complete.
Required:
a. Prepare a production cost report; the company uses weighted-average process costing.
b. Show the flow of costs through T-accounts. Assume that current period conversion costs are credited to various payables.
Prepare a production cost report; the company uses weighted-average process costing
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In: Accounting
Smithson Company uses a job-order costing system and has two manufacturing departments—Molding and Fabrication. The company provided the following estimates at the beginning of the year:
| Molding | Fabrication | Total | ||||
| Machine-hours | 23,000 | 33,000 | 56,000 | |||
| Fixed manufacturing overhead costs | $ | 730,000 | $ | 220,000 | $ | 950,000 |
| Variable manufacturing overhead per machine-hour | $ | 5.00 | $ | 5.00 | ||
During the year, the company had no beginning or ending inventories and it started, completed, and sold only two jobs—Job D-75 and Job C-100. It provided the following information related to those two jobs:
| Job D-75: | Molding | Fabrication | Total | |||
| Direct materials cost | $ | 377,000 | $ | 329,000 | $ | 706,000 |
| Direct labor cost | $ | 210,000 | $ | 170,000 | $ | 380,000 |
| Machine-hours | 18,000 | 5,000 | 23,000 | |||
| Job C-100: | Molding | Fabrication | Total | |||
| Direct materials cost | $ | 280,000 | $ | 290,000 | $ | 570,000 |
| Direct labor cost | $ | 100,000 | $ | 220,000 | $ | 320,000 |
| Machine-hours | 5,000 | 28,000 | 33,000 | |||
Smithson had no overapplied or underapplied manufacturing overhead
during the year.
Assume Smithson uses departmental overhead rates based on machine-hours.
2-a. Compute the predetermined departmental overhead rates. (Round your answer to 2 decimal places.)
2-b. Compute the total manufacturing costs assigned to Job D-75 and Job C-100. (Round your intermediate calculations to 2 decimal places.)
2-c. If Smithson establishes bid prices that are 120% of total manufacturing costs, what bid price would it have established for Job D-75 and Job C-100? (Round your intermediate calculations to 2 decimal places.)
2-d. What is Smithson’s cost of goods sold for the year? (Round your intermediate calculations to 2 decimal places.)
In: Accounting
Mastery Problem: Evaluating Variances from Standard Costs
Sole Purpose Shoe Company
Sole Purpose Shoe Company is owned and operated by Sarah Charles. The company manufactures casual shoes, with manufacturing facilities in your state. Sarah began the business this year, and while she has a great deal of experience in manufacturing popular and comfortable shoes, she needs some help in evaluating her results for the year, and asks for your help.
Starting Questions
Sarah’s first questions for you have to do with the general ideas and terminology used to evaluate variances.
Provide answers to the following questions (1)-(3).
1. Why might Sarah want to use standard costs to compare with her actual costs?
a. Standard costs give management a cost structure for products that is applicable for the entire life of the business.
b. Standard costs allow management to motivate employees by comparing their performance to what it would be under perfect conditions.
c. Management can evaluate the differences between standard costs and actual costs to focus on correcting the cost variances.
2. What are some possible drawbacks to using standard costs that Sarah might consider?
a. Standards limit operating improvements because employees may be discouraged from improving beyond the standards.
b. Standards may become “stale” in a dynamic manufacturing environment.
c. Employees may focus only on efficiency improvement and their own operations rather than considering the larger objectives of the organization.
d. Since standards are impossible to attain, they are a distraction from the work at hand.
e. Since standards never change, they do not reflect reality.
3. Sarah wants to be sure she understands the basic definitions involved:
Answer the following questions by selecting the correct words.
A favorable variance occurs when the actual cost (what the product does cost) is the standard cost (what the product should cost). A favorable variance is represented by a number, indicating that costs are than expected.
An unfavorable variance occurs when the actual cost (what the product does cost) is the standard cost (what the product should cost). An unfavorable variance is represented by a number, indicating that costs are than expected.
Direct Materials
Under normal conditions, Sarah spends $8.40 per unit of materials, and it will take 3.60 units of material per pair of shoes. During July, Sole Purpose Shoe Company incurred actual direct materials costs of $61,321 for 6,890 units of direct materials in the production of 2,150 pairs of shoes.
Complete the following table, showing the direct materials variance relationships for July for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a favorable cost variance, and a positive number for an unfavorable cost variance.
| Actual Cost | Standard Cost | |||||||||
| Actual Quantity |
X | Actual Price |
Actual Quantity |
X | Standard Price |
Standard Quantity |
X | Standard Price |
||
| X | $ | X | $ | X | $ | |||||
| = $ | = $ | = $ | ||||||||
| Direct Materials Variance: |
Direct Materials Variance: |
|||||||||
| $ | $ | |||||||||
| Total Direct Materials Variance: |
||||||||||
| $ | ||||||||||
Direct Labor
Under normal conditions, Sarah pays her employees $8.50 per hour, and it will take 2.80 hours of labor per pair of shoes. During August, Sole Purpose Shoe Company incurred actual direct labor costs of $65,880 for 7,320 hours of direct labor in the production of 2,100 pairs of shoes.
Complete the following table, showing the direct labor variance relationships for August for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a favorable variance, and a positive number for an unfavorable variance.
| Actual Cost | Standard Cost | |||||||||
| Actual Hours |
X | Actual Rate |
Actual Hours |
X | Standard Rate |
Standard Hours |
X | Standard Rate |
||
| X | $ | X | $ | X | $ | |||||
| = $ | = $ | = $ | ||||||||
| Direct Labor Variance: |
Direct Labor Variance: |
|||||||||
| $ | $ | |||||||||
| Total Direct Labor Variance: |
||||||||||
| $ | ||||||||||
Budget Performance Report
Sarah has learned a lot from you over the past two months, and has compiled the following data for Sole Purpose Shoe Company for September using the techniques you taught her. She would like your help in preparing a Budget Performance Report for September. The company produced 3,000 pairs of shoes that required 10,500 units of material purchased at $8.20 per unit and 8,100 hours of labor at an hourly rate of $8.90 per hour during the month. Actual factory overhead during September was $24,300. When entering variances, use a negative number for a favorable cost variance, and a positive number for an unfavorable cost variance.
Use the data in the following table to prepare the Budget Performance Report for Sole Purpose Shoe Company for September.
Manufacturing Costs |
Standard Price |
Standard Quantity |
Standard Cost Per Unit |
| Direct materials | $8.40 per unit | 3.60 units per pair | $30.24 |
| Direct labor | $8.50 per hour | 2.80 hours per pair | 23.80 |
| Factory overhead | $2.70 per hour | 2.80 hours per pair | 7.56 |
| Total standard cost per pair | $61.60 |
| Sole Purpose Shoe Company Budget Performance Report For the Month Ended September 30 |
|||
Manufacturing Costs |
Actual Costs |
Standard Cost at Actual Volume |
Cost Variance - (Favorable) Unfavorable |
| Direct materials | $ | $ | $ |
| Direct labor | |||
| Factory overhead | |||
| Total manufacturing costs | $ | $ | $ |
Final Questions
Before Sarah makes any changes based on the Budget Performance Report for September, she wants to be sure she understands the results, and has the following questions for you.
Answer the following questions (1) and (2). All questions pertain to the September data.
1. What caused the total cost variance for direct materials?
a. The actual quantity of direct materials per unit was less than the standard quantity.
b. The actual price for direct materials per unit was less than the standard price.
c. The favorable price variance dominated the unfavorable quantity variance, causing the total cost variance for direct materials to be favorable.
d. The unfavorable quantity variance dominated the favorable price variance, causing the total cost variance for direct materials to be unfavorable.
e. A factor other than those listed caused the total cost variance for direct materials.
2. What caused the total cost variance for direct labor?
a. The actual number of labor hours per unit was less than the standard number.
b. The unfavorable rate variance was larger than the favorable time variance, causing the total cost variance for direct labor to be unfavorable.
c. The favorable time variance was larger than the unfavorable rate variance, causing the total cost variance for direct labor to be favorable.
d. The actual rate for labor hours per unit was less than the standard rate.
e. A factor other than those listed caused the total cost variance for direct labor.
In: Accounting
Mastery Problem: Evaluating Variances from Standard Costs
Sole Purpose Shoe Company
Sole Purpose Shoe Company is owned and operated by Sarah Charles. The company manufactures casual shoes, with manufacturing facilities in your state. Sarah began the business this year, and while she has a great deal of experience in manufacturing popular and comfortable shoes, she needs some help in evaluating her results for the year, and asks for your help.
Starting Questions
Sarah’s first questions for you have to do with the general ideas and terminology used to evaluate variances.
Provide answers to the following questions (1)-(3).
1. Why might Sarah want to use standard costs to compare with her actual costs?
a. Standard costs give management a cost structure for products that is applicable for the entire life of the business.
b. Standard costs allow management to motivate employees by comparing their performance to what it would be under perfect conditions.
c. Management can evaluate the differences between standard costs and actual costs to focus on correcting the cost variances.
2. What are some possible drawbacks to using standard costs that Sarah might consider?
a. Standards limit operating improvements because employees may be discouraged from improving beyond the standards.
b. Standards may become “stale” in a dynamic manufacturing environment.
c. Employees may focus only on efficiency improvement and their own operations rather than considering the larger objectives of the organization.
d. Since standards are impossible to attain, they are a distraction from the work at hand.
e. Since standards never change, they do not reflect reality.
3. Sarah wants to be sure she understands the basic definitions involved:
Answer the following questions by selecting the correct words.
A favorable variance occurs when the actual cost (what the product does cost) is the standard cost (what the product should cost). A favorable variance is represented by a number, indicating that costs are than expected.
An unfavorable variance occurs when the actual cost (what the product does cost) is the standard cost (what the product should cost). An unfavorable variance is represented by a number, indicating that costs are than expected.
Direct Materials
Under normal conditions, Sarah spends $8.40 per unit of materials, and it will take 3.60 units of material per pair of shoes. During July, Sole Purpose Shoe Company incurred actual direct materials costs of $63,101 for 7,090 units of direct materials in the production of 2,200 pairs of shoes.
Complete the following table, showing the direct materials variance relationships for July for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a favorable cost variance, and a positive number for an unfavorable cost variance.
| Actual Cost | Standard Cost | |||||||||
| Actual Quantity |
X | Actual Price |
Actual Quantity |
X | Standard Price |
Standard Quantity |
X | Standard Price |
||
| X | $ | X | $ | X | $ | |||||
| = $ | = $ | = $ | ||||||||
| Direct Materials Variance: |
Direct Materials Variance: |
|||||||||
| $ | $ | |||||||||
| Total Direct Materials Variance: |
||||||||||
| $ | ||||||||||
Direct Labor
Under normal conditions, Sarah pays her employees $8.50 per hour, and it will take 2.80 hours of labor per pair of shoes. During August, Sole Purpose Shoe Company incurred actual direct labor costs of $65,340 for 7,260 hours of direct labor in the production of 2,200 pairs of shoes.
Complete the following table, showing the direct labor variance relationships for August for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a favorable variance, and a positive number for an unfavorable variance.
| Actual Cost | Standard Cost | |||||||||
| Actual Hours |
X | Actual Rate |
Actual Hours |
X | Standard Rate |
Standard Hours |
X | Standard Rate |
||
| X | $ | X | $ | X | $ | |||||
| = $ | = $ | = $ | ||||||||
| Direct Labor Variance: |
Direct Labor Variance: |
|||||||||
| $ | $ | |||||||||
| Total Direct Labor Variance: |
||||||||||
| $ | ||||||||||
Budget Performance Report
Sarah has learned a lot from you over the past two months, and has compiled the following data for Sole Purpose Shoe Company for September using the techniques you taught her. She would like your help in preparing a Budget Performance Report for September. The company produced 3,000 pairs of shoes that required 10,500 units of material purchased at $8.20 per unit and 8,100 hours of labor at an hourly rate of $8.90 per hour during the month. Actual factory overhead during September was $24,300. When entering variances, use a negative number for a favorable cost variance, and a positive number for an unfavorable cost variance.
Use the data in the following table to prepare the Budget Performance Report for Sole Purpose Shoe Company for September.
Manufacturing Costs |
Standard Price |
Standard Quantity |
Standard Cost Per Unit |
| Direct materials | $8.40 per unit | 3.60 units per pair | $30.24 |
| Direct labor | $8.50 per hour | 2.80 hours per pair | 23.80 |
| Factory overhead | $2.70 per hour | 2.80 hours per pair | 7.56 |
| Total standard cost per pair | $61.60 |
| Sole Purpose Shoe Company Budget Performance Report For the Month Ended September 30 |
|||
Manufacturing Costs |
Actual Costs |
Standard Cost at Actual Volume |
Cost Variance - (Favorable) Unfavorable |
| Direct materials | $ | $ | $ |
| Direct labor | |||
| Factory overhead | |||
| Total manufacturing costs | $ | $ | $ |
Final Questions
Before Sarah makes any changes based on the Budget Performance Report for September, she wants to be sure she understands the results, and has the following questions for you.
Answer the following questions (1) and (2). All questions pertain to the September data.
1. What caused the total cost variance for direct materials?
a. The actual quantity of direct materials per unit was less than the standard quantity.
b. The actual price for direct materials per unit was less than the standard price.
c. The favorable price variance dominated the unfavorable quantity variance, causing the total cost variance for direct materials to be favorable.
d. The unfavorable quantity variance dominated the favorable price variance, causing the total cost variance for direct materials to be unfavorable.
e. A factor other than those listed caused the total cost variance for direct materials.
2. What caused the total cost variance for direct labor?
a. The actual number of labor hours per unit was less than the standard number.
b. The unfavorable rate variance was larger than the favorable time variance, causing the total cost variance for direct labor to be unfavorable.
c. The favorable time variance was larger than the unfavorable rate variance, causing the total cost variance for direct labor to be favorable.
d. The actual rate for labor hours per unit was less than the standard rate.
e. A factor other than those listed caused the total cost variance for direct labor.
In: Accounting
the following cost-of-quality data were collected at the installment loan department of the Kenney Bank. Classify these data into the appropriate cost-of-quality categories.
1.
Run credit checks:$2,036.03
2.Review documents:$3,290.66
3.Make document corrections; gather additional information:$1,696.47
4.Prepare tickler file; review and follow up on titles, insurance, second meetings:$105.22
5.Review all output:$2,914.92
6.Correct rejects and incorrect output:$433.63
7.Reconcile incomplete collateral report:$78.89
8.Handle dealer problem calls; address associate problems; research and communicate information:$2,290.55
9.Compensate for system downtime: $557.17
10.Conduct training:$1,168.91
Loan Payment
1.Receive, inspect, and process payments:$797.14
2.Respond to inquiries when no coupon is presented with payments:$859.31
Loan Payoff
1.Receive, inspect, and process payoff and release documents:$205.36
2.Research payoff problems:$15.12
Calculate the amount and the percent of the total. Round your answers for dollar values to the nearest cent. Round your answers for percentage values to two decimal places.
Total Appraisal costs. $. Percent of Total %
Total External failure costs. $. Percent of Total %
Total Internal failure costs$ Percent of Total%
Total Prevention costs. $. Percent of Total%
In: Accounting