Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below:
| Flexible Budget | Actual | ||||||
| Sales (7,000 pools) | $ | 235,000 | $ | 235,000 | |||
| Variable expenses: | |||||||
| Variable cost of goods sold* | 78,540 | 96,420 | |||||
| Variable selling expenses |
18,000 |
18,000 | |||||
| Total variable expenses |
96,540 |
114,420 | |||||
| Contribution margin |
138,460 |
120,580 | |||||
| Fixed expenses: | |||||||
| Manufacturing overhead | 54,000 | 54,000 | |||||
| Selling and administrative | 69,000 | 69,000 | |||||
| Total fixed expenses |
123,000 |
123,000 | |||||
| Net operating income (loss) | $ | 15,460 | $ |
(2,420 |
) | ||
*Contains direct materials, direct labor, and variable manufacturing overhead.
Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to “get things under control.” Upon reviewing the plant’s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool:
| Standard Quantity or Hours | Standard Price or Rate |
Standard Cost | ||||
| Direct materials | 3.4 pounds | $ |
2.40 |
per pound | $ | 8.16 |
| Direct labor | 0.3 hours | $ |
6.40 |
per hour | 1.92 | |
| Variable manufacturing overhead | 0.6 hours* | $ |
1.90 |
per hour |
1.14 |
|
| Total standard cost per unit | $ | 11.22 | ||||
*Based on machine-hours.
During June the plant produced 7,000 pools and incurred the following costs:
Used 23,600 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)
Worked 2,700 direct labor-hours at a cost of $6.10 per hour.
Incurred variable manufacturing overhead cost totaling $10,350 for the month. A total of 4,500 machine-hours was recorded.
It is the company’s policy to close all variances to cost of goods sold on a monthly basis.
Required:
1. Compute the following variances for June:
a. Materials price and quantity variances.
b. Labor rate and efficiency variances.
c. Variable overhead rate and efficiency variances.
2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month.
In: Accounting
Problem 9-18 Comprehensive Variance Analysis [LO9-4, LO9-5, LO9-6]
Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below:
| Flexible Budget | Actual | ||||||
| Sales (3,000 pools) | $ | 179,000 | $ | 179,000 | |||
| Variable expenses: | |||||||
| Variable cost of goods sold* | 33,390 | 44,540 | |||||
| Variable selling expenses |
11,000 |
11,000 | |||||
| Total variable expenses |
44,390 |
55,540 | |||||
| Contribution margin |
134,610 |
123,460 | |||||
| Fixed expenses: | |||||||
| Manufacturing overhead | 50,000 | 50,000 | |||||
| Selling and administrative | 75,000 | 75,000 | |||||
| Total fixed expenses |
125,000 |
125,000 | |||||
| Net operating income (loss) | $ | 9,610 | $ |
(1,540 |
) | ||
*Contains direct materials, direct labor, and variable manufacturing overhead.
Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to “get things under control.” Upon reviewing the plant’s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool:
| Standard Quantity or Hours |
Standard Price or Rate |
Standard Cost | ||||
| Direct materials | 3.6 pounds | $ |
2.00 |
per pound | $ | 7.20 |
| Direct labor | 0.5 hours | $ |
6.60 |
per hour | 3.30 | |
| Variable manufacturing overhead | 0.3 hours* | $ |
2.10 |
per hour |
0.63 |
|
| Total standard cost per unit | $ | 11.13 | ||||
*Based on machine-hours.
During June the plant produced 3,000 pools and incurred the following costs:
Purchased 15,800 pounds of materials at a cost of $2.45 per pound.
Used 10,600 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)
Worked 2,100 direct labor-hours at a cost of $6.30 per hour.
Incurred variable manufacturing overhead cost totaling $3,000 for the month. A total of 1,200 machine-hours was recorded.
It is the company’s policy to close all variances to cost of goods sold on a monthly basis.
Required:
1. Compute the following variances for June:
a. Materials price and quantity variances.
b. Labor rate and efficiency variances.
c. Variable overhead rate and efficiency variances.
2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month.
In: Accounting
Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below:
| Flexible Budget | Actual | ||||||
| Sales (7,000 pools) | $ | 235,000 | $ | 235,000 | |||
| Variable expenses: | |||||||
| Variable cost of goods sold* | 78,540 | 96,420 | |||||
| Variable selling expenses |
18,000 |
18,000 | |||||
| Total variable expenses |
96,540 |
114,420 | |||||
| Contribution margin |
138,460 |
120,580 | |||||
| Fixed expenses: | |||||||
| Manufacturing overhead | 54,000 | 54,000 | |||||
| Selling and administrative | 69,000 | 69,000 | |||||
| Total fixed expenses |
123,000 |
123,000 | |||||
| Net operating income (loss) | $ | 15,460 | $ |
(2,420 |
) | ||
*Contains direct materials, direct labor, and variable manufacturing overhead.
Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to “get things under control.” Upon reviewing the plant’s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool:
| Standard Quantity or Hours |
Standard Price or Rate |
Standard Cost | ||||
| Direct materials | 3.4 pounds | $ |
2.40 |
per pound | $ | 8.16 |
| Direct labor | 0.3 hours | $ |
6.40 |
per hour | 1.92 | |
| Variable manufacturing overhead | 0.6 hours* | $ |
1.90 |
per hour |
1.14 |
|
| Total standard cost per unit | $ | 11.22 | ||||
*Based on machine-hours.
During June the plant produced 7,000 pools and incurred the following costs:
Purchased 28,800 pounds of materials at a cost of $2.85 per pound.
Used 23,600 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)
Worked 2,700 direct labor-hours at a cost of $6.10 per hour.
Incurred variable manufacturing overhead cost totaling $10,350 for the month. A total of 4,500 machine-hours was recorded.
It is the company’s policy to close all variances to cost of goods sold on a monthly basis.
Required:
1. Compute the following variances for June:
a. Materials price and quantity variances.
b. Labor rate and efficiency variances.
c. Variable overhead rate and efficiency variances.
2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month.
In: Accounting
Experiments A and B are 2 experiments performed by mixing alkaline phosphatase enzyme with Pnpp substrate. The reaction was run for 5 minutes for each tube, then stopped by adding NaOH.
A)Changing enzyme concentration
|
Tube |
Reaction Buffer (mL) |
5.4 mM of pNPP substrate (mL) |
0.002 mg/ml of AP enzyme (mL) |
3M of NaOH (mL) |
Absorbance |
Final Enzyme concentration (mM) |
Velocity (umol/min/mL) |
|
1 |
3.41 |
0.04 |
0.05 |
0.875 |
0.284 |
||
|
2 |
3.36 |
0.04 |
0.1 |
0.875 |
0.387 |
||
|
3 |
3.31 |
0.04 |
0.15 |
0.875 |
0.509 |
||
|
4 |
3.26 |
0.04 |
0.2 |
0.875 |
0.538 |
||
|
5 |
3.21 |
0.04 |
0.25 |
0.875 |
0.569 |
||
|
6 |
3.16 |
0.04 |
0.3 |
0.875 |
0.602 |
||
|
7 |
3.11 |
0.04 |
0.35 |
0.875 |
0.620 |
||
|
8 |
3.06 |
0.04 |
0.4 |
0.875 |
0.638 |
Calculations for each tube:
1)Calculate final enzyme concentrations in each tube
2)Use beers law to convert absorbance to concentrations (umol). Molar extinction coefficient of p-nitrophenol is 16.2 mM^-1cm^-1. Path length is 1 cm.
3)Calculate velocity (umol/min/mL), make sure to correct the concentration for NaOH addition
B)Changing ph
|
Tube |
Reaction Buffer pH |
Reaction Buffer (mL) |
5.4 mM of pNPP substrate (mL) |
0.002 mg/ml of AP enzyme (mL) |
3M of NaOH (mL) |
Absorbance |
Final substrate concentration (mM) |
Velocity (umol/min/mL) |
|
1 |
7 |
3.39 |
0.04 |
0.07 |
0.875 |
0.194 |
||
|
2 |
7.5 |
3.39 |
0.04 |
0.07 |
0.875 |
0.244 |
||
|
3 |
8 |
3.39 |
0.04 |
0.07 |
0.875 |
0.276 |
||
|
4 |
8.5 |
3.39 |
0.04 |
0.07 |
0.875 |
0.347 |
||
|
5 |
9 |
3.39 |
0.04 |
0.07 |
0.875 |
0.451 |
||
|
6 |
10 |
3.39 |
0.04 |
0.07 |
0.875 |
0.292 |
||
|
7 |
11 |
3.39 |
0.04 |
0.07 |
0.875 |
0.102 |
||
|
8 |
12 |
3.39 |
0.04 |
0.07 |
0.875 |
0.056 |
Calculations for each tube:
1)Calculate final substrate concentrations
2)Use beers law to convert absorbance to concentrations (umol). Molar extinction coefficient of p-nitrophenol is 16.2 mM^-1cm^-1. Path length is 1 cm.
3)Calculate velocity (umol/min/mL), make sure to correct the concentration for NaOH addition
In: Chemistry
Problem 10-15 Comprehensive Variance Analysis [LO10-1, LO10-2, LO10-3]
Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below:
| Flexible Budget | Actual | ||||||
| Sales (6,000 pools) | $ | 240,000 | $ | 240,000 | |||
| Variable expenses: | |||||||
| Variable cost of goods sold* | 57,900 | 74,210 | |||||
| Variable selling expenses |
18,000 |
18,000 | |||||
| Total variable expenses |
75,900 |
92,210 | |||||
| Contribution margin |
164,100 |
147,790 | |||||
| Fixed expenses: | |||||||
| Manufacturing overhead | 66,000 | 66,000 | |||||
| Selling and administrative | 84,000 | 84,000 | |||||
| Total fixed expenses |
150,000 |
150,000 | |||||
| Net operating income (loss) | $ | 14,100 | $ |
(2,210 |
) | ||
*Contains direct materials, direct labor, and variable manufacturing overhead.
Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to “get things under control.” Upon reviewing the plant’s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool:
| Standard Quantity or Hours |
Standard Price or Rate |
Standard Cost | ||||
| Direct materials | 3.4 pounds | $ |
2.00 |
per pound | $ | 6.80 |
| Direct labor | 0.3 hours | $ |
7.50 |
per hour | 2.25 | |
| Variable manufacturing overhead | 0.2 hours* | $ |
3.00 |
per hour |
0.60 |
|
| Total standard cost per unit | $ | 9.65 | ||||
*Based on machine-hours.
During June, the plant produced 6,000 pools and incurred the following costs:
Purchased 25,400 pounds of materials at a cost of $2.45 per pound.
Used 20,200 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)
Worked 2,400 direct labor-hours at a cost of $7.20 per hour.
Incurred variable manufacturing overhead cost totaling $5,100 for the month. A total of 1,500 machine-hours was recorded.
It is the company’s policy to close all variances to cost of goods sold on a monthly basis.
Required:
1. Compute the following variances for June:
a. Materials price and quantity variances.
b. Labor rate and efficiency variances.
c. Variable overhead rate and efficiency variances.
2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month.
In: Accounting
Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below:
| Flexible Budget | Actual | ||||||
| Sales (8,000 pools) | $ | 265,000 | $ | 265,000 | |||
| Variable expenses: | |||||||
| Variable cost of goods sold* | 88,960 | 106,490 | |||||
| Variable selling expenses |
16,000 |
16,000 | |||||
| Total variable expenses |
104,960 |
122,490 | |||||
| Contribution margin |
160,040 |
142,510 | |||||
| Fixed expenses: | |||||||
| Manufacturing overhead | 65,000 | 65,000 | |||||
| Selling and administrative | 80,000 | 80,000 | |||||
| Total fixed expenses |
145,000 |
145,000 | |||||
| Net operating income (loss) | $ | 15,040 | $ |
(2,490 |
) | ||
*Contains direct materials, direct labor, and variable manufacturing overhead.
Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to “get things under control.” Upon reviewing the plant’s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool:
| Standard Quantity or Hours | Standard Price or Rate |
Standard Cost | ||||
| Direct materials | 3.0 pounds | $ |
2.50 |
per pound | $ | 7.50 |
| Direct labor | 0.4 hours | $ |
7.10 |
per hour | 2.84 | |
| Variable manufacturing overhead | 0.3 hours* | $ |
2.60 |
per hour |
0.78 |
|
| Total standard cost per unit | $ | 11.12 | ||||
*Based on machine-hours.
During June, the plant produced 8,000 pools and incurred the following costs:
Used 23,800 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)
Worked 3,800 direct labor-hours at a cost of $6.80 per hour.
Incurred variable manufacturing overhead cost totaling $8,100 for the month. A total of 2,700 machine-hours was recorded.
It is the company’s policy to close all variances to cost of goods sold on a monthly basis.
Required:
1. Compute the following variances for June:
a. Materials price and quantity variances.
b. Labor rate and efficiency variances.
c. Variable overhead rate and efficiency variances.
2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month.
In: Accounting
Problem 10-15 Comprehensive Variance Analysis [LO10-1, LO10-2, LO10-3]
Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below:
| Flexible Budget | Actual | ||||||
| Sales (7,000 pools) | $ | 255,000 | $ | 255,000 | |||
| Variable expenses: | |||||||
| Variable cost of goods sold* | 85,400 | 104,590 | |||||
| Variable selling expenses |
15,000 |
15,000 | |||||
| Total variable expenses |
100,400 |
119,590 | |||||
| Contribution margin |
154,600 |
135,410 | |||||
| Fixed expenses: | |||||||
| Manufacturing overhead | 64,000 | 64,000 | |||||
| Selling and administrative | 79,000 | 79,000 | |||||
| Total fixed expenses |
143,000 |
143,000 | |||||
| Net operating income (loss) | $ | 11,600 | $ |
(7,590 |
) | ||
*Contains direct materials, direct labor, and variable manufacturing overhead.
Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to “get things under control.” Upon reviewing the plant’s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool:
| Standard Quantity or Hours | Standard Price or Rate |
Standard Cost | ||||
| Direct materials | 4.0 pounds | $ |
2.40 |
per pound | $ | 9.60 |
| Direct labor | 0.3 hours | $ |
7.00 |
per hour | 2.10 | |
| Variable manufacturing overhead | 0.2 hours* | $ |
2.50 |
per hour |
0.50 |
|
| Total standard cost per unit | $ | 12.20 | ||||
*Based on machine-hours.
During June, the plant produced 7,000 pools and incurred the following costs:
Used 27,800 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)
Worked 2,700 direct labor-hours at a cost of $6.70 per hour.
Incurred variable manufacturing overhead cost totaling $4,930 for the month. A total of 1,700 machine-hours was recorded.
It is the company’s policy to close all variances to cost of goods sold on a monthly basis.
Required:
1. Compute the following variances for June:
a. Materials price and quantity variances.
b. Labor rate and efficiency variances.
c. Variable overhead rate and efficiency variances.
2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month.
In: Accounting
Flexible Budgeting and Variance Analysis
I Love My Chocolate Company makes dark chocolate and light chocolate. Both products require cocoa and sugar. The following planning information has been made available:
| Standard Amount per Case | ||||||
| Dark Chocolate | Light Chocolate | Standard Price per Pound | ||||
| Cocoa | 10 lbs. | 7 lbs. | $4.90 | |||
| Sugar | 8 lbs. | 12 lbs. | 0.60 | |||
| Standard labor time | 0.3 hr. | 0.4 hr. | ||||
| Dark Chocolate | Light Chocolate | |||
| Planned production | 5,500 cases | 11,400 cases | ||
| Standard labor rate | $14.00 per hr. | $14.00 per hr. | ||
I Love My Chocolate Company does not expect there to be any beginning or ending inventories of cocoa or sugar. At the end of the budget year, I Love My Chocolate Company had the following actual results:
| Dark Chocolate | Light Chocolate | |||
| Actual production (cases) | 5,200 | 11,900 | ||
| Actual Price per Pound | Actual Pounds Purchased and Used | |||
| Cocoa | $5.00 | 136,000 | ||
| Sugar | 0.55 | 179,800 | ||
| Actual Labor Rate | Actual Labor Hours Used | |||
| Dark chocolate | $13.70 per hr. | 1,420 | ||
| Light chocolate | 14.30 per hr. | 4,880 | ||
Required:
1. Prepare the following variance analyses for both chocolates and the total, based on the actual results and production levels at the end of the budget year:
a. Direct materials price variance, direct materials quantity variance, and total variance.
b. Direct labor rate variance, direct labor time variance, and total variance.
Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. If there is no variance, enter a zero.
| a. | Direct materials price variance | $ | |
| Direct materials quantity variance | $ | ||
| Total direct materials cost variance | $ | ||
| b. | Direct labor rate variance | $ | |
| Direct labor time variance | $ | ||
| Total direct labor cost variance | $ |
2. The variance analyses should be based on the ---- amounts at ------- volumes. The budget must flex with the volume changes. If the ----- volume is different from the planned volume, as it was in this case, then the budget used for performance evaluation should reflect the change in direct materials and direct labor that will be required for the----- production. In this way, spending from volume changes can be separated from efficiency and price variances.
In: Accounting
DataSpan, Inc., automated its plant at the start of the current year and installed a flexible manufacturing system. The company is also evaluating its suppliers and moving toward Lean Production. Many adjustment problems have been encountered, including problems relating to performance measurement. After much study, the company has decided to use the performance measures below, and it has gathered data relating to these measures for the first four months of operations.
| Month | ||||||||
| 1 | 2 | 3 | 4 | |||||
| Throughput time (days) | ? | ? | ? | ? | ||||
| Delivery cycle time (days) | ? | ? | ? | ? | ||||
| Manufacturing cycle efficiency (MCE) | ? | ? | ? | ? | ||||
| Percentage of on-time deliveries | 89 | % | 84 | % | 81 | % | 78 | % |
| Total sales (units) | 3880 | 3714 | 3524 | 3390 | ||||
Management has asked for your help in computing throughput time, delivery cycle time, and MCE. The following average times have been logged over the last four months:
| Average per Month (in days) | |||||||||
| 1 | 2 | 3 | 4 | ||||||
| Move time per unit | 0.6 | 0.3 | 0.4 | 0.4 | |||||
| Process time per unit | 2.7 | 2.5 | 2.4 | 2.2 | |||||
| Wait time per order before start of production | 25.0 | 27.4 | 30.0 | 32.5 | |||||
| Queue time per unit | 4.4 | 4.9 | 5.5 | 6.2 | |||||
| Inspection time per unit | 0.7 | 0.9 | 0.9 | 0.7 | |||||
Required:
1-a. Compute the throughput time for each month.
1-b. Compute the delivery cycle time for each month.
1-c. Compute the manufacturing cycle efficiency (MCE) for each month.
2. Evaluate the company’s performance over the last four months.
3-a. Refer to the move time, process time, and so forth, given for month 4. Assume that in month 5 the move time, process time, and so forth, are the same as in month 4, except that through the use of Lean Production the company is able to completely eliminate the queue time during production. Compute the new throughput time and MCE.
3-b. Refer to the move time, process time, and so forth, given for month 4. Assume in month 6 that the move time, process time, and so forth, are again the same as in month 4, except that the company is able to completely eliminate both the queue time during production and the inspection time. Compute the new throughput time and MCE.
In: Accounting
DataSpan, Inc., automated its plant at the start of the current year and installed a flexible manufacturing system. The company is also evaluating its suppliers and moving toward Lean Production. Many adjustment problems have been encountered, including problems relating to performance measurement. After much study, the company has decided to use the performance measures below, and it has gathered data relating to these measures for the first four months of operations.
| Month | ||||||||
| 1 | 2 | 3 | 4 | |||||
| Throughput time (days) | ? | ? | ? | ? | ||||
| Delivery cycle time (days) | ? | ? | ? | ? | ||||
| Manufacturing cycle efficiency (MCE) | ? | ? | ? | ? | ||||
| Percentage of on-time deliveries | 82 | % | 77 | % | 74 | % | 71 | % |
| Total sales (units) | 2100 | 2010 | 1907 | 1835 | ||||
Management has asked for your help in computing throughput time, delivery cycle time, and MCE. The following average times have been logged over the last four months:
| Average per Month (in days) | |||||||||
| 1 | 2 | 3 | 4 | ||||||
| Move time per unit | 0.6 | 0.3 | 0.4 | 0.4 | |||||
| Process time per unit | 2.3 | 2.2 | 2.1 | 2.0 | |||||
| Wait time per order before start of production | 20.0 | 21.9 | 26.0 | 28.0 | |||||
| Queue time per unit | 4.7 | 5.5 | 6.4 | 7.4 | |||||
| Inspection time per unit | 0.8 | 1.1 | 1.1 | 0.8 | |||||
Required:
1-a. Compute the throughput time for each month.
1-b. Compute the delivery cycle time for each month.
1-c. Compute the manufacturing cycle efficiency (MCE) for each month.
2. Evaluate the company’s performance over the last four months.
3-a. Refer to the move time, process time, and so forth, given for month 4. Assume that in month 5 the move time, process time, and so forth, are the same as in month 4, except that through the use of Lean Production the company is able to completely eliminate the queue time during production. Compute the new throughput time and MCE.
3-b. Refer to the move time, process time, and so forth, given for month 4. Assume in month 6 that the move time, process time, and so forth, are again the same as in month 4, except that the company is able to completely eliminate both the queue time during production and the inspection time. Compute the new throughput time and MCE.
In: Accounting