Using the Chapter 7 - User Guide to the PMBOK 4th edition - Project Cost Management course material as a guide and the Earned Value (EV) formulas described in the example problem, answer the questions below by showing your calculations and solutions for each project parameter. Our 6-month project example is described as follows:

Total Hours of Work:  1,100 Hours

Cost per Hour:  $185 per hour

Project cost at end of month three: $110,000

Estimated work complete at end of month three: 60%

Actual work complete at end month three: 50%

Complete the Table above (at Month 3) to answer the following questions:

1.   Calculate BAC - What will the total budgeted cost of the project be at completion?

2.   Calculate EV - How much earned work has actually been completed by the end of Month 3?

3.   Calculate CPI - How much of the actual cost incurred by the end of Month 3 was actually earned to this same point in time?

4.   Calculate EAC – Based on your review at 3 months, what will the total cost of the project be at completion?

5.   Calculate ETC - How much more money will it take to finish the project?

6.   Calculate VAR - How much over or under budget will the total project cost be?

7.   Calculate PV - How much work in dollars was expected to be finished at the end of Month 3?

8.   Calculate CV - How much more (or less) did the work completed at this point actually cost compared to what was originally planned?

9.   Calculate SV - How much more (or less) earned work, in dollars, has been accomplished at this point compared to what was originally planned?

10. Calculate SPI - How does the work completed (%) compare to that planned for the end of Month 3?

11. Calculate TCPI based on BAC- What level of performance must future project work meet in order to meet the original budget?

12. Calculate TCPI based on EAC - What level of performance must future project meet in order to meet the project’s revised budget based on this current performance review?

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:

*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:

*Based on machine-hours.

During June, the plant produced 7,000 pools and incurred the following costs:

1. Purchased 33,000 pounds of materials at a cost of $2.85 per pound.

2. Used 27,800 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)

3. Worked 2,700 direct labor-hours at a cost of $6.70 per hour.

4. 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.

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:

*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:

*Based on machine-hours.

During June, the plant produced 6,000 pools and incurred the following costs:

1. Purchased 29,000 pounds of materials at a cost of $3.05 per pound.

2. Used 23,800 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)

3. Worked 2,400 direct labor-hours at a cost of $7.80 per hour.

4. Incurred variable manufacturing overhead cost totaling $8,400 for the month. A total of 2,100 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.

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:

*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:

*Based on machine-hours.

During June the plant produced 6,000 pools and incurred the following costs:

1. Purchased 24,800 pounds of materials at a cost of $2.75 per pound.

2. Used 19,600 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)

3. Worked 4,200 direct labor-hours at a cost of $6.00 per hour.

4. Incurred variable manufacturing overhead cost totaling $7,260 for the month. A total of 3,300 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.

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:

*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:

*Based on machine-hours.

During June the plant produced 5,000 pools and incurred the following costs:

1. Purchased 24,000 pounds of materials at a cost of $2.65 per pound.

2. Used 18,800 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)

3. Worked 4,100 direct labor-hours at a cost of $6.50 per hour.

4. Incurred variable manufacturing overhead cost totaling $7,560 for the month. A total of 2,800 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.

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:

*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:

*Based on machine-hours.

During June the plant produced 5,000 pools and incurred the following costs:

1. Purchased 24,000 pounds of materials at a cost of $2.65 per pound.

2. Used 18,800 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)

3. Worked 4,100 direct labor-hours at a cost of $6.50 per hour.

4. Incurred variable manufacturing overhead cost totaling $7,560 for the month. A total of 2,800 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.

Problem:

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:

*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:

*Based on machine-hours.

During June the plant produced 15,000 pools and incurred the following costs:

1. Purchased 60,000 pounds of materials at a cost of $4.95 per pound.
2. Used 49,200 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)
3. Worked 11,800 direct labor-hours at a cost of $17.00 per hour.
4. Incurred variable manufacturing overhead cost totaling $18,290 for the month. A total of 5,900 machine-hours was recorded.

It is the company’s policy to close all variances to cost of goods sold on a monthly basis.

Question:

2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month. What impact did this figure have on the company’s income statement? Show computations.

3. Pick out the two most significant variances that you computed in (1) above. Explain to Ms. Dunn possible causes of these variances.

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:

*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:

*Based on machine-hours.

During June the plant produced 8,000 pools and incurred the following costs:

1. Purchased 29,000 pounds of materials at a cost of $2.95 per pound.

2. Used 23,800 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)

3. Worked 3,800 direct labor-hours at a cost of $6.80 per hour.

4. 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.

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:

*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:

*Based on machine-hours.

During June, the plant produced 8,000 pools and incurred the following costs:

1. Purchased 33,800 pounds of materials at a cost of $2.65 per pound.

2. Used 28,600 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)

3. Worked 4,600 direct labor-hours at a cost of $7.40 per hour.

4. Incurred variable manufacturing overhead cost totaling $12,600 for the month. A total of 3,500 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.

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 (5,000 pools) $ 235,000 $ 235,000 Variable expenses: Variable cost of goods sold* 71,350 86,370 Variable selling expenses 13,000 13,000 Total variable expenses 84,350 99,370 Contribution margin 150,650 135,630 Fixed expenses: Manufacturing overhead 62,000 62,000 Selling and administrative 77,000 77,000 Total fixed expenses 139,000 139,000 Net operating income (loss) $ 11,650 $ (3,370 ) *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 3.8 pounds $ 2.20 per pound $ 8.36 Direct labor 0.7 hours $ 6.80 per hour 4.76 Variable manufacturing overhead 0.5 hours* $ 2.30 per hour 1.15 Total standard cost per unit $ 14.27 *Based on machine-hours. During June the plant produced 5,000 pools and incurred the following costs: Purchased 24,000 pounds of materials at a cost of $2.65 per pound. Used 18,800 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.) Worked 4,100 direct labor-hours at a cost of $6.50 per hour. Incurred variable manufacturing overhead cost totaling $7,560 for the month. A total of 2,800 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.