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Chapter 10 Standard Costs and the Balanced Scorecard

True/False Questions

1. Ideal standards do not allow for machine breakdowns and other normal inefficiencies.

Ans: True AACSB: Reflective Thinking AICA BB: Critical ThinkingAICA !": Re#orting $%: 1 $evel: &as'

(. The standard #rice #er unit for direct materials should reflect the final) delivered costof the materials) net of an' discounts taken.


*. The standard +uantit' or standard hours allowed refers to the amount of the in#ut thatshould have been used to #roduce the actual out#ut of the #eriod.


,. In develo#ing a direct material #rice standard) the e-#ected freight cost on thematerials should be included.


. /aterial #rice variances are often isolated at the time materials are #urchased) ratherthan when the' are #laced into #roduction) to facilitate earlier recognition ofvariances.

Ans: True AACSB: Reflective Thinking AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: &as'

0. aste on the #roduction line will result in a materials #rice variance.

Ans: !alse AACSB: Anal'tic AICA BB: Critical Thinking

AICA !": Re#orting $%: ( $evel: /edium

2. It is best to isolate the material +uantit' variance when the materials are #urchased.

Ans: !alse AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: 3ard

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-7




4. hen the material #rice variance is recorded at the time of #urchase) raw materials arerecorded as inventor' at actual cost.

Ans: !alse AACSB: Reflective Thinking AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: &as'

5. If im#rovement in a #erformance measure on a balanced scorecard should lead toim#rovement in another #erformance measure) but does not) then em#lo'ees mustwork harder.

Ans: !alse AACSB: Anal'ticAICA BB: Critical Thinking6 Resource /anagement AICA !": Re#orting$%: $evel: /edium

17. A manufacturing c'cle efficienc' 8/C&9 of greater than one is im#ossible.

Ans: True AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: 0 $evel: /edium

11. Ins#ection Time is generall' considered to be valueadded time.

Ans: !alse AACSB: Reflective Thinking AICA BB: Critical ThinkingAICA !": Re#orting $%: 0 $evel: &as'

1(. A manager would generall' like to see a trend indicating an increase in setu# time.

Ans: !alse AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: 0 $evel: &as'

1*. A manufacturing c'cle efficienc' 8/C&9 of 7.* means that 27; of through#ut time iss#ent on nonvalueadded activities.

Ans: True AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: 0 $evel: /edium

1,. If standard costs e-ceed actual costs) a credit entr' would be made in the a##ro#riatevariance account to record the variance.

Ans: True AACSB: Reflective Thinking AICA BB: Critical ThinkingAICA !": Re#orting A##endi-: 17 $%: 2 $evel: /edium

10-8 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




1. If a favorable variance is recorded in the accounting records) it will be recorded as acredit.

Ans: True AACSB: Reflective Thinking AICA BB: Critical ThinkingAICA !": Re#orting A##endi-: 17 $%: 2 $evel: &as'

Multiple Choice Questions

10. To measure controllable #roduction inefficiencies) which of the following is the best basis for a com#an' to use in establishing the standard hours allowed for the out#ut ofone unit of #roduct<A9 Average historical #erformance for the last several 'ears.

B9 &ngineering estimates based on ideal #erformance.C9 &ngineering estimates based on attainable #erformance.=9 The hours #er unit that would be re+uired for the #resent workforce to satisf'

e-#ected demand over the long run.

Ans: C AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: 1 $evel: /edium

12. oorl' trained workers could have an unfavorable effect on which of the followingvariances<

$abor Rate >ariance /aterials ?uantit' >arianceA9 @es @esB9 @es "oC9 "o @es=9 "o "o

Ans: C AACSB: Anal'ticAICA BB: Critical Thinking6 Resource /anagement AICA !": Re#orting$%: (6 * $evel: /edium

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-




14. Richter Cor#. recorded the following entr' in its general ledger:

ork in rocess 0)777/aterial ?uantit' >ariance 77

Raw /aterials 0)77

The above ournal entr' indicates that:A9 the materials +uantit' variance for the #eriod was favorable.B9 less materials were used in #roduction during the #eriod than was called for at

standard.C9 the materials +uantit' variance for the #eriod was unfavorable.=9 the actual #rice #aid for the materials used in #roduction was greater than the

standard #rice allowed.

Ans: C AACSB: Reflective Thinking AICA BB: Critical ThinkingAICA !": Re#orting A##endi-: 17 $%: (6 2 $evel: /edium

15. hen the actual #rice #aid on credit for a raw material e-ceeds its standard #rice) the ournal entr' would include:A9 Credit to Raw /aterials6 Credit to /aterials rice >arianceB9 Credit to Accounts a'able6 Credit to /aterials rice >arianceC9 Credit to Raw /aterials6 =ebit to /aterials rice >ariance=9 Credit to Accounts a'able6 =ebit to /aterials rice >ariance

Ans: = AACSB: Reflective Thinking AICA BB: Critical ThinkingAICA !": Re#orting A##endi-: 17 $%: (6 2 $evel: 3ard

(7. The variance that is most useful in assessing the #erformance of the #urchasingde#artment manager is:A9 the materials +uantit' variance.B9 the materials #rice variance.C9 the labor rate variance.=9 the labor efficienc' variance.

Ans: B AACSB: Reflective Thinking

AICA BB: Critical Thinking6 Resource /anagement AICA !": Re#orting$%: ( $evel: &as'





(1. The #roduction de#artment should generall' be res#onsible for material #ricevariances that resulted from:

A9 #urchases made in uneconomical lotsies.B9 rush orders arising from #oor scheduling.C9 #urchase of the wrong grade of materials.=9 changes in the market #rices of raw materials.

Ans: B AACSB: Reflective ThinkingAICA BB: Critical Thinking6 Resource /anagement AICA !": Re#orting$%: ( $evel: &as'

((. A debit balance in the labor efficienc' variance account indicates that:A9 standard hours e-ceed actual hours.

B9 actual hours e-ceed standard hours.C9 standard rate and standard hours e-ceed actual rate and actual hours.=9 actual rate and actual hours e-ceed standard rate and standard hours.

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting A##endi-: 17 $%: *6 2 $evel: 3ardSource: CA) ada#ted

(*. The ournal entr' below:

ork in rocess ()777

=irect $abor &fficienc' >ariance 1)(77=irect $abor Rate >ariance ()777Accrued ages a'able (,)(77

indicates that:A9 the total labor variance was 477) unfavorable.B9 em#lo'ees received an une-#ected rate increase during the #eriod.C9 more labor time was re+uired to com#lete the out#ut of the #eriod than was

allowed at standard.=9 res#onses a and b are both correct.

Ans: C AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting A##endi-: 17 $%: *6 2 $evel: 3ard





(,. hen the actual wage rate #aid to direct labor workers e-ceeds the standard wage rate)the ournal entr' would include:

A9 =ebit to ages a'able6 Credit to $abor Rate >arianceB9 =ebit to orkInrocess6 Credit to $abor Rate >arianceC9 =ebit to ages a'able6 =ebit to $abor Rate >ariance=9 =ebit to orkInrocess6 =ebit to $abor Rate >ariance

Ans: = AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting A##endi-: 17 $%: *6 2 $evel: /edium

(. =uring a recent length' strike at /orell /anufacturing Com#an') managementre#laced striking assembl' line workers with office workers. The assembl' lineworkers were being #aid 14 #er hour while the office workers are onl' #aid 17 #er

hour. hat is the most likel' effect on the labor variances in the first month of thisstrike<

$abor Rate >ariance $abor &fficienc' >arianceA9 Dnfavorable "o effectB9 "o effect DnfavorableC9 Dnfavorable !avorable=9 !avorable Dnfavorable

Ans: = AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: * $evel: /edium

(0. hich of the following will increase a com#an'Es manufacturing c'cle efficienc'8/C&9<

=ecrease in rocess Time =ecrease in ait TimeA9 @es @esB9 @es "oC9 "o @es=9 "o "o

Ans: = AACSB: Anal'tic AICA BB: Critical Thinking

AICA !": Re#orting $%: 0 $evel: 3ard

10-1! Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




(2. ersechino Cor#oration is develo#ing standards for its #roducts. %ne #roduct re+uiresan in#ut that is #urchased for 4(.77 #er kilogram from the su##lier. B' #a'ing cash)

the com#an' gets a discount of (; off this #urchase #rice. Shi##ing costs from thesu##lierEs warehouse amount to 0. #er kilogram. Receiving costs are 7.,2 #erkilogram. The standard #rice #er kilogram of this in#ut should be:A9 20.0(B9 42.*4C9 57.00=9 4(.77

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: 1 $evel: &as'

Solution:

urchase #rice.................................................................. 4(.77$ess cash discount 8(; F 4(9........................................ 1.0,Shi##ing costs from the su##lierGs warehouse................ 0.Receiving costs................................................................ 7.,2Standard #rice #er kilogram............................................ 42.*4

(4. /a'all Cor#oration is develo#ing standards for its #roducts. &ach unit of out#ut of the #roduct re+uires 7.5( kilogram of a #articular in#ut. The allowance for waste ands#oilage is 7.7( kilogram of this in#ut for each unit of out#ut. The allowance for

reects is 7.11 kilogram of this in#ut for each unit of out#ut. The standard +uantit' inkilograms of this in#ut #er unit of out#ut should be:A9 7.57B9 7.5(C9 7.25=9 1.7

Ans: = AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: 1 $evel: &as'

Solution:

/aterial re+uirement #er unit of out#ut) in kilograms... . 7.5(Allowance for waste and s#oilages) in kilograms........... 7.7(Allowance for reects) in kilograms................................. 7.11Standard +uantit' #er unit' of out#ut) in kilograms........ 1.7

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-1"




(5. Heffs Cor#oration is develo#ing direct labor standards. The basic direct labor wage rateis 1,.77 #er hour. &m#lo'ment ta-es are 11; of the basic wage rate. !ringe benefits

are *.(, #er direct laborhour. The standard rate #er direct laborhour should be:A9 1,.77B9 5.((C9 ,.24=9 14.24


Solution:

Basic direct labor wage rate............................................. 1,.77&m#lo'ment ta-es 811; F 1,.779................................. 1.,!ringe benefits................................................................. *.(,Standard rate #er direct laborhour.................................. 14.24

*7. refrath Cor#oration is develo#ing direct labor standards. A #articular #roductre+uires 7.21 direct laborhours #er unit. The allowance for breaks and #ersonal needsis 7.7, direct laborhours #er unit. The allowance for cleanu#) machine downtime) andreects is 7.1( direct laborhours #er unit. The standard direct laborhours #er unitshould be:A9 7.21

B9 7.42C9 7.02=9 7.


Solution:

Basic labor time #er unit.................................................. 7.21Allowance for breaks and #ersonal needs....................... 7.7,

Allowance for cleanu#) machine downtime) and reects. 7.1(Standard direct laborhours #er unit................................ 7.42

10-1# Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




*1. The budget for /a' called for #roduction of 5)777 units. Actual out#ut for the monthwas 4)77 units with total direct materials cost of 1(2)77 and total direct labor cost

of 22)22. The direct labor standards call for , minutes of direct labor #er unit at acost of 1( #er direct laborhour. The direct materials standards call for one #ound ofdirect materials #er unit at a cost of 1 #er #ound. The actual direct laborhours were0)*2. >ariance anal'sis of the #erformance for the month of /a' would indicate:A9 2)77 favorable materials +uantit' variance.B9 1)(2 favorable direct labor efficienc' variance.C9 1)(2 unfavorable direct labor efficienc' variance.=9 1)(2 unfavorable direct labor rate variance.

Ans: = AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: (6 * $evel: /edium Source: C/A) ada#ted

Solution:

Actual rate J =irect labor cost K =irect laborhours J 22)22 K 0)*2 J 1(.(7$abor rate variance J Actual hours F 8Actual rate L Standard rate9J 0)*2 F 81(.(7 L 1(9 J 1)(2 unfavorableStandard hours J Standard hours #er unit F Actual out#utJ 8, minutes K 07 minutes9 F 4)77 J 0)*2$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9J 1( F 80)*2 L 0)*29 J 7

*(. $ion Com#an'Es direct labor costs for the month of Hanuar' were as follows:

Actual total direct laborhours................... (7)777Standard total direct laborhours................ (1)777=irect labor rate varianceMunfavorable.... *)777Total direct labor cost................................. 1(0)777

hat was $ionEs direct labor efficienc' variance<A9 0)777 favorableB9 0)17 favorableC9 0)*77 favorable

=9 0),7 favorable

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: 3ard Source: CA) ada#ted

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-1$




Solution:

Actual rate J =irect labor cost K Actual direct laborhoursJ 1(0)777 K (7)777 J 0.*7$abor rate variance J Actual hours F 8Actual rate L Standard rate9*)777 J (7)777 F 80.*7 L Standard rate9Standard rate J 0.1$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9J 0.1 F 8(7)777 L (1)7779J 0)17 favorable

**. Information on Re- Co.Es direct material costs for /a' follows:

Actual +uantit' of direct materials #urchased and used. *7)777 #oundsActual cost of direct materials........................................ 4,)777Dnfavorable direct materials +uantit' variance.............. *)777Standard +uantit' of direct materials allowed for /a'

#roduction.................................................................... (5)777 #ounds

!or the month of /a') what was Re-Es direct materials #rice variance<A9 ()477 favorableB9 ()477 unfavorableC9 0)777 unfavorable=9 0)777 favorable

Ans: = AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: 3ard Source: CA) ada#ted

Solution:

/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9*)777 J Standard #rice F 8*7)777 L (5)7779Standard #rice J */aterials #rice variance J 8Actual +uantit' F Actual #rice9 L 8Actual +uantit' FStandard #rice9 J 4,)777 L 8*7)777 F *9 J 0)777 favorable

10-1% Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




*,. /att Com#an' uses a standard cost s'stem. Information for raw materials for roductRBI for the month of %ctober follows:

Standard #rice #er #ound of raw materials.................. 1.07Actual #urchase #rice #er #ound of raw materials....... 1.Actual +uantit' of raw materials #urchased................. ()777 #oundsActual +uantit' of raw materials used......................... 1)577 #oundsStandard +uantit' allowed for actual #roduction......... 1)477 #ounds

hat is the materials #urchase #rice variance<A9 57 favorableB9 57 unfavorableC9 177 favorable

=9 177 unfavorable

Ans: C AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: /edium Source: CA) ada#ted

Solution:

/aterials #rice variance J Actual +uantit' #urchased F 8Actual #rice L Standard #rice9J ()777 F 81. L 1.079J 177 favorable





*. Buckler Com#an' manufactures desks with vin'l to#s. The standard material cost forthe vin'l used #er /odel S desk is (2.77 based on 1( s+uare feet of vin'l at a cost of

(.( #er s+uare foot. A #roduction run of 1)777 desks in /arch resulted in usage of1()077 s+uare feet of vin'l at a cost of (.77 #er s+uare foot) a total cost of ()(77.The materials +uantit' variance resulting from the above #roduction run was:A9 1)(77 unfavorableB9 1)*7 unfavorableC9 1)477 favorable=9 *)17 favorable

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: /edium Source: CA) ada#ted

Solution:

Standard +uantit' J Standard +uantit' #er unit F Actual out#utJ 1( F 1)777 J 1()777/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9 J(.( F 81()077 L 1()7779 J 1)*7 unfavorable

*0. /agno Cereal Cor#oration uses a standard cost s'stem to collect costs related to the #roduction of its Ncrunch' #ickleO cereal. The #ickle 8materials9 standards for each batch of cereal #roduced are 1., #ounds of #ickles at a standard cost of *.77 #er #ound. =uring the month of August) /agno #urchased 24)777 #ounds of #ounds at a

total cost of (*)77. /agno used all of these #ickles to #roduce 07)777 batches ofcereal. hat is /agnoEs materials +uantit' variance for the month of August<A9 1)77 unfavorableB9 14)777 favorableC9 15)77 unfavorable=9 ,)777 unfavorable

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: /ediumSolution:

Standard +uantit' J Standard +uantit' #er unit F Actual out#utJ 1., F 07)777 J 4,)777/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9 J* F 824)777 L 4,)7779 J 14)777 favorable





*2. The following materials standards have been established for a #articular #roduct:

Standard +uantit' #er unit of out#ut..... .. .. . (.0 metersStandard #rice............................................ 17. #er meter

The following data #ertain to o#erations concerning the #roduct for the last month:

Actual materials #urchased........................ 0)777 metersActual cost of materials #urchased............ 5),77Actual materials used in #roduction.......... )077 metersActual out#ut.............................................. ()(77 units

hat is the materials +uantit' variance for the month<

A9 ,)((7 DB9 1)144 !C9 1)(00 !=9 *)507 D

Ans: C AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: &as'

Solution:

Standard +uantit' J Standard +uantit' #er unit F Actual out#ut

J (.0 F ()(77 J )2(7/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9 J17. F 8)077 L )2(79 J 1)(00 favorable





*4. The following materials standards have been established for a #articular #roduct:

Standard +uantit' #er unit of out#ut..... .. .. . (.4 gramsStandard #rice............................................ 1(.7 #er gram


Actual materials #urchased........................ 0)(77 gramsActual cost of materials #urchased............ 41)*7Actual materials used in #roduction.......... )277 gramsActual out#ut.............................................. 1)477 units

hat is the materials #rice variance for the month<

A9 0)(7 DB9 ,)7*7 DC9 4)025 D=9 0)2 D

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: &as'

Solution:

/aterials #rice variance J Actual +uantit' F 8Actual #rice L Standard #rice9

J 41)*7 L 80)(77 F 1(.79J 41)*7 L 22)77J ,)7*7 unfavorable

10-!0 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




*5. The standards for direct materials in making a certain #roduct are (7 #ounds at 7.2 #er #ound. =uring the #ast #eriod) 0)777 units of #roduct were made and the material

+uantit' variance was *7)777 D. The number of #ounds of direct material usedduring the #eriod amounted to:A9 1)747)777B9 1)107)777C9 1)(77)777=9 24,)777

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: 3ard

Solution:

Standard +uantit' J Standard +uantit' #er unit F Actual out#utJ (7 F 0)777 J 1)1(7)777/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9*7)777 J 7.2 F 8Actual +uantit' L 1)1(7)7779Actual +uantit' J 1)107)777

,7. The standard cost card for one unit of a finished #roduct shows the following:

Standard ?uantit'or 3ours

Standard rice or Rate

=irect materials................................. 1( feet < #er foot=irect labor....................................... 1. hours 1( #er hour >ariable manufacturing overhead..... 1. hours 4 #er hour

If the total standard variable cost for one unit of finished #roduct is 24) then thestandard #rice #er foot for direct materials is:A9 (B9 *C9 ,=9

Ans: C AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: /edium

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-!1




Solution:

Standard unit variable cost J 8=irect material standard +uantit' F =irect materialstandard #rice9 P 8=irect labor standard hours F =irect labor standard rate9 P 8>ariableoverhead standard +uantit' F >ariable overhead standard #rice924 J 81( F =irect materials standard #rice9 P 81. F 1(9 P 81. F 49=irect materials standard #rice J ,

,1. Construction Safet' Cor#oration manufactures orange #lastic safet' suits for roadworkers. The following information relates to the cor#orationEs #urchases and use ofmaterial for the month of A#ril:

Total 'ards of material

/aterial #urchased................................................. 4)77/aterial used in #roduction................................... 4)777Standard material allowed for suits #roduced........ 4)(77

Construction Safet'Es materials #rice variance for A#ril was 1)(77 favorable. Itsmaterials +uantit' variance for A#ril was 577 favorable. hat does ConstructionSafet' use as a standard #rice #er 'ard of material for its safet' suits<A9 1.47B9 (.,7C9 *.77=9 ,.7

Ans: = AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: 3ard

Solution:

/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9L577 J Standard #rice F 84)777 L 4)(779Standard #rice J ,.7

10-!! Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




,(. A small com#onent is #urchased for the use in the #roduction of a maor #roduct. Thestandard #rice of the com#onent is 7.4. =uring a recent #eriod) 0)477 units of the

small com#onent were #urchased and the materials #rice variance was ,,unfavorable. The standard number of units of the small com#onent allowed for theactual out#ut of the #eriod was ),,7 units. hat was the actual #urchase #rice #erunit<A9 7.2B9 7.22C9 7.5*=9 7.5

Ans: C AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: 3ard Source: CI/A) ada#ted

Solution:

/aterials #rice variance J Actual +uantit' #urchased F 8Actual #rice L Standard #rice9,, J 0)477 F 8Actual #rice L 7.49Actual #rice J 7.5*

,*. /aucco Cor#oration has #rovided the following data concerning its direct laborcosts for Se#tember:

Standard wage rate............. 1*.*7 #er =$3

Standard hours................... . =$3s #er unitActual wage rate................ 1*.(7 #er =$3Actual hours....................... ,)447 =$3sActual out#ut...................... 4),77 units

The $abor Rate >ariance for Se#tember would be recorded as a:A9 debit of ,)44.B9 credit of ,)44.C9 credit of ,)0(7.=9 debit of ,)0(7.

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting A##endi-: 17 $%: *6 2 $evel: &as'

Solution:

$abor rate variance J Actual hours F 8Actual rate L Standard rate9J ,)447 F 81*.(7 L 1*.*79J ,)44 favorable

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-!"




,,. Raggs Cor#orationEs standard wage rate is 1(.(7 #er direct laborhour 8=$39 andaccording to the standards) each unit of out#ut re+uires *.5 =$3s. In A#ril) )(77 units

were #roduced) the actual wage rate was 1(.17 #er =$3) and the actual hours were(,)17 =$3s. The $abor Rate >ariance for A#ril would be recorded as a:A9 credit of ()7(4.B9 credit of (),1.C9 debit of ()7(4.=9 debit of (),1.


Solution:

$abor rate variance J Actual hours F 8Actual rate L Standard rate9J (,)17 F 81(.17 L 1(.(79J (),1 favorable

,. armuth Cor#oration has #rovided the following data concerning its direct labor costsfor Se#tember:

Standard wage rate............. 1(.77 #er =$3Standard hours................... 4.4 =$3s #er unitActual wage rate................ 1(.7 #er =$3

Actual hours....................... 04)1(7 =$3sActual out#ut...................... 0)077 units

The $abor &fficienc' >ariance for Se#tember would be recorded as a:A9 credit of 1(7),47.B9 debit of 1(7),47.C9 debit of 1()77.=9 credit of 1()77.


Solution:

Standard hours J Standard hours #er unit F Actual out#utJ 4.4 F 0)077 J 4)747$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9J 1( F 804)1(7 L 4)7479J 1(7),47 unfavorable

10-!# Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




,0. !ast Cor#orationEs standard wage rate is 1*.17 #er direct laborhour 8=$39 andaccording to the standards) each unit of out#ut re+uires (.0 =$3s. In /arch) 4)777

units were #roduced) the actual wage rate was 1(.,7 #er =$3) and the actual hourswere 14)727 =$3s. The $abor &fficienc' >ariance for /arch would be recorded as a:A9 debit of **)4(.B9 credit of **)4(.C9 debit of *)20*.=9 credit of *)20*.

Ans: = AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting A##endi-: 17 $%: *6 2 $evel: &as'

Solution:

Standard hours J Standard hours #er unit F Actual out#utJ (.0 F 4)777 J (7)477$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9J 1*.17 F 814)727 L (7)4779J *)20* favorable

,2. =ata concerning Barber Com#an'Es direct labor costs for the month of Hanuar' follow:

Actual total direct laborhours................... *,)77Standard total direct laborhours................ *)777

Total direct labor cost................................. (,1)77=irect labor efficienc' variance................. *)(77 !avorable

hat is BarberEs direct labor rate variance<A9 12)(7 unfavorableB9 (7)277 unfavorableC9 (1)777 unfavorable=9 (1)777 favorable

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: * $evel: 3ard Source: CA) ada#ted

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-!$




Solution:

$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9L*)(77 J Standard rate F 8*,)77 L *)7779Standard rate J 0.,7Actual rate J =irect labor cost K Actual hoursJ (,1)77 K *,)77 J 2$abor rate variance J Actual hours F 8Actual rate L Standard rate9J *,)77 F 82.77 L 0.,79J (7)277 unfavorable

,4. i#er Com#an' should work 1)777 direct laborhours to #roduce (7 units of #roduct.=uring %ctober the com#an' worked 1)(7 direct laborhours and #roduced *77 units.

The standard hours allowed for %ctober would be:A9 1)(7 hoursB9 1)777 hoursC9 1)(77 hours=9 it is im#ossible to determine from the data given.

Ans: C AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: * $evel: &as'

Solution:

Standard hours #er unit J Budgeted direct labor hours K Budgeted #roductionJ 1)777 K (7 J ,Standard hours J Standard hours #er unit F Actual #roduction J , F *77 J 1)(77

,5. Qann' &lectronics Com#an' uses a standard cost s'stem to collect costs related to the #roduction of its water ski radios. The direct labor standard for each radio is 7.5 hours.The standard direct labor cost #er hour is 2.(7.=uring the month of August) Qann'Es water ski radio #roduction used 0)077 directlaborhours at a total direct labor cost of ,4)274. This resulted in #roduction of 0)577water ski radios for August. hat is Qann'Es labor rate variance for the month ofAugust<

A9 52( favorableB9 1)144 unfavorableC9 ()107 favorable=9 ()474 unfavorable

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: * $evel: /edium

10-!% Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




Solution:

$abor rate variance J Actual hours F 8Actual rate L Standard rate9J ,4)274 L 80)077 F 2.(79J 1)144 unfavorable

7. The following labor standards have been established for a #articular #roduct:

Standard laborhours #er unit of out#ut..... .7 hoursStandard labor rate..................................... 14.( #er hour


Actual hours worked...... .. .. 5)477 hoursActual total labor cost........ 120),77Actual out#ut...................... 1)577 units

hat is the labor efficienc' variance for the month<A9 *)7( DB9 ),77 DC9 *)7( !=9 ),2 D


AICA !": Re#orting $%: * $evel: &as'

Solution:

Standard hours J Standard hours #er unit F Actual out#utJ F 1)577 J 5)77$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9J 14.( F 85)477 L 5)779 J ),2 unfavorable

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-!7





Standard laborhours #er unit of out#ut..... 1.1 hoursStandard labor rate..................................... 11.07 #er hour


Actual hours worked...... .. .. 5),77 hoursActual total labor cost........ 172)0*7Actual out#ut...................... 4)077 units

hat is the labor rate variance for the month<A9 042 !

B9 ()170 !C9 1),17 !=9 ()170 D

Ans: C AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: * $evel: &as'

Solution:

Actual rate J $abor cost K Actual hoursJ 172)0*7 K 5),77 J 11.,

$abor rate variance J Actual hours F 8Actual rate L Standard rate9J 5),77 F 811., L 11.079 J 1),17 favorable

(. Information on estcott Com#an'Es direct labor costs for a recent month follows:

Standard direct labor rate........................... *.2Actual direct labor rate............................... *.7Total standard direct laborhours............... 17)777=irect labor efficienc' variance................. ,)(77 Dnfavorable

hat were the actual hours worked during the month) rounded to the nearest hour<

A9 17)21,B9 11)1(7C9 11)(77=9 11)51,

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: * $evel: 3ard Source: C/A) ada#ted

10-!8 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




Solution:

$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9,)(77 J *.2 F 8Actual hours L 17)7779Actual hours J 11)1(7

*. Sullivan Cor#orationEs direct labor costs for the month of /arch were as follows:

Total standard direct laborhours............... ,()777Total actual direct laborhours................... ,7)777=irect labor rate variance........................... 4),77 !avorableStandard direct labor rate #er hour............. 0.*7

hat was SullivanEs total direct labor #a'roll for the month of /arch<A9 (,*)077B9 (,,)777C9 (07)777=9 (07),77

Ans: A AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: * $evel: 3ard Source: CA) ada#ted

Solution:

$abor rate variance J Actual hours F 8Actual rate L Standard rate9L4),77 J ,7)777 F 8Actual rate L 0.*79Actual rate J 0.75=irect labor #a'roll J Actual rate F Actual hoursJ 0.75 F ,7)777 J (,*)077

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-!




,. &lliott Com#an' makes and sells a single #roduct. $ast #eriod the com#an'Es laborrate variance was 1,),77 D. =uring the #eriod) the com#an' worked *0)777 actual

direct laborhours at an actual cost of **4),77. The standard labor rate for the #roductin dollars #er hour is:A9 5.,7B9 5.77C9 4.7=9 4.17

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: * $evel: /edium

Solution:

Actual rate J =irect labor cost K =irect laborhoursJ **4),77 K *0)777 J 5.,7$abor rate variance J Actual hours F 8Actual rate L Standard rate91,),77 J *0)777 F 85.,7 L Standard rate9Standard rate J 5.77

. Tub Co. uses a standard cost s'stem. The following information #ertains to directlabor for #roduct B for the month of %ctober:

Actual rate #aid...................................................... 4.,7 #er hour

Standard rate.......................................................... 4.77 #er hour Standard hours allowed for actual #roduction....... ()777 hours$abor efficienc' variance....................................... 1)077 unfavorable

hat were the actual hours worked during %ctober<A9 1)477B9 1)417C9 ()157=9 ()(77


AICA !": Re#orting $%: * $evel: /edium Source: CA) ada#ted

Solution:

$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours91)077 J 4 F 8Actual hours L ()7779Actual hours J ()(77

10-"0 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




0. In a #eriod) the labor efficienc' variance was ,)777 favorable. The standard directlabor wage rate is 1(.77 #er hour and *7 direct laborhours are allowed for each unit

of out#ut. iven that ,*)77 direct laborhours were worked) how man' units ofout#ut were actuall' #roduced<A9 17B9 1)*77C9 1),7=9 1)077

Ans: = AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: * $evel: 3ard Source: CI/A) ada#ted

Solution:

$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9J Standard rate F Actual hours L 8Standard hours #er unit F Actual out#ut9L,)777 J 1( F ,*)77 L 8*7 F Actual out#ut9Actual out#ut J 1)077

2. ar# /anufacturing Cor#oration uses a standard cost s'stem to collect costs related tothe #roduction of its ski lift chairs. ar# uses machine hours as an overhead base. Thevariable overhead standards for each chair are 1.( machine hours at a standard cost of14 #er hour.=uring the month of Se#tember) ar# incurred *,)777 machine hours in the

#roduction of *()777 ski lift chairs. The total variable overhead cost was 0,5),77.hat is ar#Es variable overhead s#ending variance for the month of Se#tember<A9 *2),77 unfavorableB9 ,1)477 favorableC9 25)(77 favorable=9 4,)7,7 favorable

Ans: A AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: , $evel: /edium

Solution:

>ariable overhead s#ending variance J 8Actual hours F Actual rate9 L 8Actual hours FStandard rate9J 0,5),77 L 8*,)777 F 149J *2),77 unfavorable

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-"1




4. The following standards for variable manufacturing overhead have been establishedfor a com#an' that makes onl' one #roduct:

Standard hours #er unit of out#ut......... 1.( hoursStandard variable overhead rate........... 17.(7 #er hour

The following data #ertain to o#erations for the last month:

Actual hours............................................... )777 hoursActual total variable overhead cost............ ()27Actual out#ut.............................................. ,)777 units

hat is the variable overhead efficienc' variance for the month<

A9 1)047 !B9 ()7,7 DC9 ()117 D=9 *)257 D

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: , $evel: &as'

Solution:

Standard hours J Standard hours #er unit F Actual out#ut

J 1.( F ,)777 J ,)477>ariable overhead efficienc' variance J Standard rate F 8Actual hours L Standardhours9 J 17.(7 F 8)777 L ,)4779 J ()7,7 unfavorable

10-"! Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




5. The following standards for variable manufacturing overhead have been establishedfor a com#an' that makes onl' one #roduct:

Standard hours #er unit of out#ut......... 4.7 hoursStandard variable overhead rate........... 11. #er hour


Actual hours............................................... 2)777 hoursActual total variable overhead cost............ 25)177Actual out#ut.............................................. 077 units

hat is the variable overhead s#ending variance for the month<

A9 (*)007 DB9 1)27 !C9 (,)407 D=9 1)(77 D


Solution:

>ariable overhead s#ending variance J 8Actual hours F Actual rate9 L 8Actual hours F

Standard rate9 J 25)177 L 82)777 F 11.9 J 1)27 favorable

07. The 3ane' Com#an' has a standard costing s'stem. >ariable manufacturing overheadis a##lied on the basis of direct laborhours. The following data are available forHanuar':

• Actual variable manufacturing overhead: ()77

• Actual direct laborhours worked: )477

• >ariable overhead s#ending variance: 077 !avorable

• >ariable overhead efficienc' variance: (),2 Dnfavorable

The standard hours allowed for Hanuar' #roduction is:A9 )52 hoursB9 )477 hoursC9 ),( hours=9 )(7 hours

Ans: = AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: , $evel: 3ard

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-""




Solution:

>ariable overhead s#ending variance J 8Actual hours F Actual rate9 L 8Actual hours FStandard rate9077 J ()77 L 8)477 F Standard rate9Standard rate J 8()77 P 0779 K )477 J ,.7>ariable overhead efficienc' variance J Standard rate F 8Actual hours L Standardhours9(),2 J ,.7 F 8)477 L Standard hours9Standard hours J )(7

01. Tanou'e Cor#oration kee#s careful track of the time re+uired to fill orders. =ataconcerning a #articular order a##ear below:

3oursait time................ 1(.2rocess time......... .. 1.0Ins#ection time....... 7.,/ove time.............. (.1?ueue time............. 4.4

The through#ut time was:A9 ,.1 hoursB9 1(.5 hours

C9 (.0 hours=9 (1. hours


Solution:

Through#ut time J rocess time P Ins#ection time P /ove time P ?ueue timeJ 1.0 P 7., P (.1 P 4.4 J 1(.5

10-"# Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




0(. Simkin Cor#oration kee#s careful track of the time re+uired to fill orders. =ataconcerning a #articular order a##ear below:

3oursait time................ (7.0rocess time........... 1.5Ins#ection time....... 7.1/ove time.............. (.2?ueue time............. ,.4

The manufacturing c'cle efficienc' 8/C&9 was closest to:A9 7.,0B9 7.70

C9 7.(7=9 7.15

Ans: C AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: 0 $evel: &as'

Solution:

/C& J >alueadded time 8rocess time9 K Through#ut timeJ rocess time K 8rocess time P Ins#ection time P /ove time P ?ueue time9J 1.5 K 81.5 P 7.1 P (.2 P ,.49 J 7.(7

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-"$




0*. Santo'o Cor#oration kee#s careful track of the time re+uired to fill orders. =ataconcerning a #articular order a##ear below:

3oursait time................ (4.7rocess time......... .. 1.7Ins#ection time....... 7.,/ove time.............. *.(?ueue time............. .1

The deliver' c'cle time was:A9 4.* hoursB9 *.( hours

C9 *2.2 hours=9 *0.* hours


Solution:

=eliver' c'cle time J ait time P Through#ut timeJ ait time P 8rocess time P Ins#ection time P /ove time P ?ueue time9J (4.7 P 81.7 P 7., P *.( P .19 J *2.2

10-"% Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




0,. inkton Cor#oration kee#s careful track of the time re+uired to fill orders. The timesrecorded for a #articular order a##ear below:

3ours/ove time.............. *.0ait time................ 1*.*?ueue time............. .1rocess time......... .. 7.Ins#ection time....... 7.(

The deliver' c'cle time was:A9 4.2 hoursB9 *.0 hours

C9 (( hours=9 ((.2 hours


Solution:

=eliver' c'cle time J ait time P Through#ut timeJ ait time P 8rocess time P Ins#ection time P /ove time P ?ueue time9J 1*.* P 87. P 7.( P *.0 P .19 J ((.2

0. Scha## Cor#oration kee#s careful track of the time re+uired to fill orders. The timesrecorded for a #articular order a##ear below:

3ours/ove time.............. (.0ait time................ 17.,?ueue time............. 0.4rocess time......... .. 1.Ins#ection time....... 7.,

The through#ut time was:A9 11.* hoursB9 (1.2 hoursC9 12.( hours=9 ,. hours

Ans: A AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: 0 $evel: &as'

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-"7




Solution:

Through#ut time J rocess time P Ins#ection time P /ove time P ?ueue timeJ 1. P 7., P (.0 P 0.4 J 11.*

00. >andenheuvel Cor#oration kee#s careful track of the time re+uired to fill orders. Thetimes recorded for a #articular order a##ear below:

3ours/ove time.............. (.,ait time................ 14.(?ueue time............. 0.4rocess time......... .. 1.4

Ins#ection time....... 7.*

The manufacturing c'cle efficienc' 8/C&9 was closest to:A9 7.70B9 7.14C9 7.0(=9 7.10


Solution:

/C& J rocess time K Through#ut timeJ rocess time K 8rocess time P Ins#ection time P /ove time P ?ueue time9J 1.4 K 81.4 P 7.* P (., P 0.49 J 7.10

10-"8 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




02. =uring the month of August) $inosa /anufacturing Cor#oration #urchased 17)777 #ounds of materials at a total actual cost of 27)777. $inosa used 4)777 #ounds of this

material for AugustEs #roduction. $inosaEs materials #rice variance for August was,)777 favorable. Its materials +uantit' variance was 2)777 unfavorable. hat ournal entr' would $inosa make to record the usage of materials and the materials+uantit' variance for the month of August<

A9 ork in rocess ()(77/aterials ?uantit' >ariance 2)777

Raw /aterials 5)(77

B9 ork in rocess 00)(77/aterials ?uantit' >ariance 2)777

Raw /aterials 5)(77

C9 Raw /aterials 0*)777/aterials ?uantit' >ariance 2)777

Accounts a'able 27)777

=9 ork in rocess 02)777/aterials ?uantit' >ariance 2)777

Raw /aterials 2,)777

Ans: A AACSB: Anal'tic AICA BB: Critical Thinking

AICA !": Re#orting A##endi-: 17 $%: 2 $evel: 3ard

Solution:

/aterials #urchased +uantit' J urchase #rice L Standard cost 8Total9L,)777 J 27)777 L Standard costStandard cost J 2,)777Raw materials J 8/aterials used K /aterials #urchased9 F Standard costJ 84)777 K 17)7779 F 2,)777 J 5)(77ork in #rocess J Raw materials L /aterials +uantit' varianceJ 5)(77 L 2)777

J ()(77

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-"




04. olio Cor#oration has #rovided the following data concerning its most im#ortant rawmaterial) com#ound A1*>:

Standard cost) #er liter........................................... *2.57Standard +uantit') liters #er unit of out#ut............. *.4Cost of material #urchased in Hul') #er liter........... *4.07/aterial #urchased in Hul') liters........................... ()(77

hen recording the #urchase of materials) Raw /aterials would be:A9 credited for 4*)*47.B9 credited for 4,)5(7.C9 debited for 4*)*47.=9 debited for 4,)5(7.

Ans: C AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting A##endi-: 17 $%: 2 $evel: &as'

Solution:

Raw materials J /aterials #urchased F Standard costJ ()(77 F *2.57 J 4*)*47

05. erstein Cor#oration has #rovided the following data concerning its most im#ortantraw material) com#ound /77?:

Standard cost) #er liter........................................... ,1.(7Standard +uantit') liters #er unit of out#ut............. (.5/aterial used in #roduction in A#ril) liters............ *(7Actual out#ut in A#ril) units................................... 177

hen recording the use of materials in #roduction) Raw /aterials would be:A9 debited for 1*)14,.B9 debited for 11)5,4.C9 credited for 1*)14,.=9 credited for 11)5,4.


Solution:

Raw materials J /aterials used F Standard costJ *(7 F ,1.(7 J 1*)14,

10-#0 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




27. Com#ound >(/ is used to make Bl'e Cor#orationEs maor #roduct. The standardcost of >(/ is (.17 #er ounce and the standard +uantit' is *.1 ounces #er unit of

out#ut. In the most recent month) 1)77 ounces of the raw material were #urchased ata cost of (.(7 #er ounce. hen recording the #urchase of materials) Raw /aterialswould be:A9 credited for *2)477.B9 credited for *2)07.C9 debited for *2)477.=9 debited for *2)07.

Ans: = AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting A##endi-: 17 $%: 2 $evel: &as'

Solution:

Raw materials J /aterials #urchased F Standard cost J 1)77 F (.17 J *2)07

21. Com#ound $,2D is used to make Sewc'k Cor#orationEs maor #roduct. Thestandard cost of com#ound $,2D is (2.47 #er ounce and the standard +uantit' is 1.*ounces #er unit of out#ut. In the most recent month) 027 ounces of the com#ound wereused to make 077 units of the out#ut. hen recording the use of materials in #roduction) Raw /aterials would be:A9 debited for 14)0(0.B9 credited for 14)0(0.

C9 debited for (1)04,.=9 credited for (1)04,.

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting A##endi-: 17 $%: 2 $evel: &as'

Solution:

Raw materials J /aterials used F Standard costJ 027 F (2.47 J 14)0(0

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-#1




2(. =ata concerning the direct labor costs for /arch of asko Cor#oration a##ear below:

Standard wage rate............. 1,.(7 #er =$3Standard hours................... .( =$3s #er unitActual wage rate................ 1.77 #er =$3Actual hours....................... 2)2(7 =$3sActual out#ut...................... 1)*77 units

The ournal entr' to record the incurrence of direct labor costs in /arch would includethe following for ork in rocess:A9 credit of 11)477.B9 credit of 5)55(.C9 debit of 5)55(.

=9 debit of 11)477.


Solution:

Standard hours J Standard hours #er unit F Actual out#utJ .( F 1)*77 J 0)207ork in #rocess J Standard hours F Standard rateJ 0)207 F 1,.(7 J 5)55(

10-#! Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




2*. Shackleford Cor#orationEs standard wage rate is 1*.27 #er direct laborhour 8=$39and according to the standards) each unit of out#ut re+uires 2.7 =$3s. In %ctober)

*)777 units were #roduced) the actual wage rate was 1,.17 #er =$3) and the actualhours were (1)207 =$3s. In the ournal entr' to record the incurrence of direct laborcosts in %ctober) the ork in rocess entr' would consist of a:A9 debit of (42)277.B9 credit of *70)410.C9 credit of (42)277.=9 debit of *70)410.

Ans: A AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting A##endi-: 17 $%: 2 $evel: &as'

Solution:

Standard hours J Standard hours #er unit F Actual out#utJ 2 F *)777 J (1)777ork in #rocess J Standard hours F Standard rateJ (1)777 F 1*.27 J (42)277

Dse the following to answer +uestions 2,2:

$ange Com#an' manufactures abstractsha#ed scul#tures made out of li+uid ade. &achscul#ture re+uires two 8(9 gallons of li+uid ade. Because of the instabilit' of the li+uid ade at

times) some scul#tures crack or shatter during the #roduction #rocess. The ade used in the broken scul#tures cannot be reused and is discarded. %n the average) one scul#ture ise-#ected to be lost for ever' nine scul#tures #roduced. In other words) eight good scul#turesare generated from ever' nine #roduction attem#ts.

2,. Dnder traditional standard costing) what amount should $ange use for the standard+uantit' of li+uid ade #er scul#ture<A9 (.777 gallonsB9 (.1( gallonsC9 (.((( gallons=9 (.(7 gallons

Ans: = AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: 1 $evel: /edium

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-#"




Solution:

Standard +uantit' J Standard +uantit' #er unit F 8roduction attem#ts K "umber ofgood scul#tures9 J ( F 85 K 49 J (.(7 gallons

2. Dnder a total +ualit' management 8T?/9 a##roach to standard costing) what amountshould $ange use for the standard +uantit' of li+uid ade #er scul#ture<A9 (.777 gallonsB9 (.1( gallonsC9 (.((( gallons=9 (.(7 gallons


AICA !": Re#orting $%: 1 $evel: /edium

Solution:

Standard +uantit' #er unit J (.777 gallons

Dse the following to answer +uestions 2022:

ouri Cor#oration is develo#ing standards for its #roducts. %ne #roduct re+uires an in#ut thatis #urchased for 4.77 #er kilogram from the su##lier. B' #a'ing cash) the com#an' gets adiscount of ,; off this #urchase #rice. Shi##ing costs from the su##lierEs warehouse amount

to ,.0( #er kilogram. Receiving costs are 7. #er kilogram. &ach unit of out#ut of the #roduct re+uires 7.2, kilogram of this in#ut. The allowance for waste and s#oilage is 7.7*kilogram of this in#ut for each unit of out#ut. The allowance for reects is 7.1* kilogram ofthis in#ut for each unit of out#ut.

10-## Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




20. The standard #rice #er kilogram of this in#ut should be:A9 4.77

B9 40.22C9 4*.(*=9 5*.2


Solution:

urchase #rice.................................................................. 4.77$ess cash discount 8,; F 49........................................ *.,7

Shi##ing costs.................................................................. ,.0(Receiving costs................................................................ 7.Standard #rice #er kilogram............................................ 40.22

22. The standard +uantit' in kilograms of this in#ut #er unit of out#ut should be:A9 7.21B9 7.4C9 7.57=9 7.2,

Ans: C AACSB: Anal'tic AICA BB: Critical Thinking

AICA !": Re#orting $%: 1 $evel: &as'

Solution:

Standard +uantit':/aterial re+uirements #er unit of out#ut......................... 7.2,Allowance for waste and s#oilage................................... 7.7*Allowance for reects....................................................... 7.1*Standard +uantit' in kilograms........................................ 7.57


arrigus Cor#oration is develo#ing direct labor standards. The basic direct labor wage rate is1,.77 #er hour. &m#lo'ment ta-es are 17; of the basic wage rate. !ringe benefits are *.* #er direct laborhour. A #articular #roduct re+uires 7.2, direct laborhours #er unit. Theallowance for breaks and #ersonal needs is 7.7 direct laborhours #er unit. The allowance for cleanu#) machine downtime) and reects is 7.1* direct laborhours #er unit.

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-#$




24. The standard rate #er direct laborhour should be:A9 5.72

B9 1,.77C9 14.5*=9 ,.5*


Solution:

Basic wage rate #er hour................................................. 1,.77&m#lo'ment ta-es 81, F 17;9...................................... 1.,7

!ringe benefits................................................................. *.*Standard rate #er direct laborhour.................................. 14.5*

25. The standard direct laborhours #er unit should be:A9 7.05B9 7.0C9 7.2,=9 7.5(


Solution:

Basic labor time #er unit.................................................. 7.2,Allowance for breaks and #ersonal needs....................... 7.7Allowance for cleanu#) machine downtime) and reects. 7.1*Standard direct laborhour #er unit.................................. 7.5(

10-#% Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




Dse the following to answer +uestions 474,:

Ravena $abs.) Inc. makes a single #roduct which has the following standards:

=irect materials.................................... (. ounces at (7 #er ounce=irect labor.......................................... 1., hours at 1(.7 #er hour >ariable manufacturing overhead...... .. 1., hours at < #er hour

>ariable manufacturing overhead is a##lied on the basis of direct labor hours. The followingdata are available for %ctober:

• *)27 units of com#ound were #roduced during the month.

• There was no beginning direct materials inventor'.

• The ending direct materials inventor' was ()777 ounces.

• =irect materials #urchased: 1()777 ounces for (()777.

• =irect labor hours worked: )077 hours at a cost of 02)(77.

• >ariable manufacturing overhead costs incurred amounted to 14)(77.

• >ariable manufacturing overhead a##lied to #roducts: 14)*2.

47. The direct materials #rice variance for %ctober is:A9 1)777 unfavorableB9 1)777 favorableC9 ()777 unfavorable

=9 ()777 favorable

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: /edium

Solution:

/aterials #rice variance J 8Actual +uantit' F Actual #rice9 L 8Actual +uantit' FStandard #rice9 J (()777 L 81()777 F (79 J 1)777 favorable

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-#7




41. The direct materials +uantit' variance for %ctober is:A9 ()77 unfavorable

B9 ()77 favorableC9 1()77 unfavorable=9 1()77 favorable

Ans: C AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: /edium

Solution:

Standard +uantit' J Standard +uantit' #er unit F Actual out#utJ (. F *)27 J 5)*2

/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9J Standard #rice F 8=irect materials #urchased in ounces L &nding inventor' inounces9 L Standard +uantit'J (7 F 81()777 L ()7779 L 5)*2J 1()77 unfavorable

4(. The direct labor efficienc' variance for %ctober is:A9 1),77 favorableB9 1)577 unfavorableC9 *)27 favorable=9 ,)*2 unfavorable


Solution:

Standard hours J Standard hours #er unit F Actual out#utJ 1., F *)27 J )(7$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9J 1(.7 F 8)077 L )(79 J ,)*2 unfavorable

10-#8 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




4*. The variable overhead s#ending variance for %ctober is:A9 1),77 favorable

B9 1)577 unfavorableC9 *)27 favorable=9 ,)*2 unfavorable

Ans: A AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: * $evel: 3ard

Solution:

Standard hours J Standard hours #er unit F Actual out#utJ 1., F *)27 J )(7

Standard rate F Standard hours #er unit F Actual out#ut J >ariable overhead a##liedStandard rate J >ariable overhead a##lied K Standard hoursJ 14)*2 K )(7 J *.7>ariable overhead s#ending variance J 8Actual hours F Actual rate9 L 8Actual hours FStandard rate9J 14)(77 L 8)077 F *.79J 1),77 favorable

4,. The variable overhead efficienc' variance for %ctober is:A9 1),77 favorableB9 1)(( unfavorable

C9 1)577 unfavorable=9 ()277 favorable

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: , $evel: 3ard

Solution:

Standard hours J Standard hours #er unit F Actual out#utJ 1., F *)27 J )(7>ariable overhead efficienc' variance J Standard rate F 8Actual hours L Standard

hours9 J *.7 F 8)077 L )(79 J 1)(( unfavorable

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-#





Beakins Com#an' #roduces a single #roduct. The standard cost card for the #roduct follows:

=irect materials 8, 'ards U #er 'ard9.................................... (7=irect labor 81. hours U 17 #er hour9..................................... 1>ariable manufacturing overhead 81. hrs U , #er Vhour9.... ... 0

=uring a recent #eriod the com#an' #roduced 1)(77 units of #roduct. >arious costs associatedwith the #roduction of these units are given below:

=irect materials #urchased 80)777 'ards9.............. (4)77=irect materials used in #roduction....................... )777 'ards

=irect labor cost incurred 8()177 hours9................ 12)47>ariable manufacturing overhead cost incurred... . 17)747

The com#an' records all variances at the earliest #ossible #oint in time. >ariablemanufacturing overhead costs are a##lied to #roducts on the basis of direct labor hours.

4. The materials #rice variance for the #eriod is:A9 1)(7 !B9 1)77 !C9 1)(7 D=9 1)77 D

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: &as'

Solution:

/aterials #rice variance J 8Actual +uantit' #urchased F Actual #rice9 L 8Actual+uantit' #urchased F Standard #rice9 J (4)77 L 80)777 F 9 J 1)77 favorable

10-$0 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




40. The materials +uantit' variance for the #eriod is:A9 57 D

B9 )777 !C9 1)777 D=9 0)777 !


Solution:

Standard +uantit' J Standard +uantit' #er unit F Actual out#utJ , F 1)(77 J ,)477

/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9 J F 8)777 L ,)4779 J 1)777 unfavorable

42. The labor rate variance for the #eriod is:A9 *)17 DB9 ()277 !C9 ()277 D=9 *)17 !

Ans: = AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: * $evel: &as'

Solution:

$abor rate variance J 8Actual hours F Actual rate9 L 8Actual hours F Standard rate9J 12)47 L 8()177 F 179 J *)17 favorable

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-$1




44. The labor efficienc' variance for the #eriod is:A9 *)777 D

B9 ()7 DC9 ()7 !=9 *)777 !

Ans: A AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: * $evel: &as'

Solution:

Standard hours J Standard hours #er unit F Actual out#utJ 1. F 1)(77 J 1)477

$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9J 17 F 8()177 L 1)4779 J *)777 unfavorable

45. The variable overhead s#ending variance for the #eriod is:A9 1)047 !B9 1),,7 DC9 1),,7 !=9 1)047 D

Ans: = AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: , $evel: &as'

Solution:

>ariable overhead s#ending variance J 8Actual hours F Actual rate9 L 8Actual hours FStandard rate9 J 17)747 L 8()177 F ,9 J 1)047 unfavorable

10-$! Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




57. The variable overhead efficienc' variance for the #eriod is:A9 1)(77 D

B9 1),,7 DC9 1)(77 !=9 1),,7 !

Ans: A AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: , $evel: &as'

Solution:

Standard hours J Standard hours #er unit F Actual out#utJ 1. F 1)(77 J 1)477

>ariable overhead efficienc' variance J Standard rate F 8Actual hours L Standardhours9 J , F 8()177 L 1)4779 J 1)(77 unfavorable


$ongview 3os#ital #erforms blood tests in its laborator'. The following standards have beenset for each blood test #erformed:

Standard ?uantit' or 3ours Standard rice or Rate=irect materials............ (.7 #lates (.2 #er #late=irect labor.................. 7.( hours 1.77 #er hour >ariable overhead......... 7.( hours 2.77 #er hour

=uring /a') the laborator' #erformed 1)77 blood tests. %n /a' 1 there were no directmaterials 8#lates9 on hand6 after a #late is used for a blood test it is discarded. >ariableoverhead is assigned to blood tests on the basis of direct labor hours. The following eventsoccurred during /a':

• *)077 #lates were #urchased for 5),7

• *)(77 #lates were used for blood tests

• *,7 actual direct labor hours were worked at a cost of )7

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-$"




51. The materials #rice variance for /a' is:A9 *07 !

B9 *07 DC9 2,7 !=9 2,7 D

Ans: A AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: &as'

Solution:

/aterials #rice variance J 8Actual +uantit' #urchased F Actual #rice9 L 8urchase+uantit' F Standard #rice9 J 5),7 L 8*)077 F (.29 J *07 favorable

5(. The materials +uantit' variance for /a' is:A9 1)07 !B9 1)07 DC9 7 D=9 2(7 !


Solution:

Standard +uantit' J Standard +uantit' #er unit F Actual out#utJ ( F 1)77 J *)777/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9 J(.2 F 8*)(77 L *)7779 J 7 unfavorable

10-$# Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




5*. The labor rate variance for /a' is:A9 (( !

B9 (( DC9 ,7 !=9 ,7 D


Solution:

$abor rate variance J 8Actual hours F Actual rate9 L 8Actual hours F Standard rate9J )7 L 8*,7 F 19 J ,7 unfavorable

5,. The labor efficienc' variance for /a' is:A9 077 !B9 077 DC9 1 D=9 1 !

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: * $evel: &as'

Solution:

Standard hours J Standard hours #er unit F Actual out#utJ 7.( F 1)77 J *77$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9J 1 F 8*,7 L *779 J 077 unfavorable

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-$$




5. The variable overhead efficienc' variance for /a' isA9 *7 !

B9 *7 DC9 (47 D=9 (47 !

Ans: C AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: , $evel: &as'

Solution:

Standard hours J Standard hours #er unit F Actual out#utJ 7.( F 1)77 J *77

>ariable overhead efficienc' variance J Standard rate F 8Actual hours L Standardhours9 J 2 F 8*,7 L *779 J (47 unfavorable


rub Chemical Com#an' has develo#ed cost standards for the #roduction of its new cologne)Choc%. The variable cost standards below relate to each 17 gallon batch of Choc%:

Standard Cost er Batch/ilk chocolate 8( #ounds U 7.4 #er #ound9.. .... ..... 1.27=irect labor 81.( hours U 1(.77 #er hour9............... 1.77

>ariable overhead 81.( hours U ,,.77 #er hour9... .. .77

>ariable manufacturing overhead at rub is a##lied based on direct labor hours. The actualresults for last month were as follows:

"umber of batches #roduced..................... *)477=irect labor hours incurred........................ ,)17ounds of chocolate #urchased.................. 5)777ounds of chocolate used in #roduction.... 2)447Cost of chocolate #urchased...................... 2)(77=irect labor cost......................................... *)(14

>ariable manufacturing overhead cost....... (7)277

10-$% Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




50. hat is Choc%Es materials 8milk chocolate9 #rice variance<A9 0 favorable

B9 ,7 favorableC9 7( unfavorable=9 2,7 unfavorable


Solution:

/aterials #rice variance J 8Actual +uantit' #urchased F Actual #rice9 L 8Actual+uantit' #urchased F Standard #rice9 J 2)(77 L 85)777 F 7.49 J ,7 favorable

52. hat is Choc%Es materials 8milk chocolate9 +uantit' variance<A9 (*4 unfavorableB9 ,20 unfavorableC9 5( favorable=9 1)157 unfavorable

Ans: A AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: /edium

Solution:

Standard +uantit' J Standard +uantit' #er unit F Actual out#utJ ( F *)477 J 2)077/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9 J7.4 F 82)447 L 2)0779 J (*4 unfavorable

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-$7




54. hat is Choc%Es labor rate variance<A9 57( favorable

B9 ()447 favorableC9 *)24( favorable=9 1,),*( favorable

Ans: A AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: * $evel: /edium

Solution:

$abor rate variance J 8Actual hours F Actual rate9 L 8Actual hours F Standard rate9J *)(14 L 8,)17 F 1(9 J 57( favorable

55. hat is Choc%Es variable overhead efficienc' variance<A9 2)(07 unfavorableB9 17)07 favorableC9 *1)(,7 unfavorable=9 *5)77 unfavorable

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: , $evel: /edium

Solution:

Standard hours J Standard hours #er unit F Actual out#utJ 1.( F *)477 J ,)27>ariable overhead efficienc' variance J Standard rate F 8Actual hours L Standardhours9 J ,, F 8,)17 L ,)279 J 17)07 favorable

10-$8 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




Dse the following to answer +uestions 17717(:

8A##endi-9 idman) Inc. makes and sells onl' one #roduct and uses standard costing. Thestandard cost sheet for one unit of #roduct includes the following:

• =irect materials: grams at 7.* #er gram

• =irect labor: 1 hour at 4 #er hour

$ast #eriod the com#an' had the following results:

• )777 grams of direct materials #urchased at 7.,7 #er gram

• ,)777 grams of direct materials used in #roduction

•

577 units of #roduct were made• 47 hours of direct labor were used at 4.7 #er hour

177. The ournal entr' to record the #urchase of direct materials last #eriod would include:A9 Raw materials ()777) =ebit6 material #rice variance (7) CreditB9 Raw materials 1)27) =ebit6 material #rice variance (7) CreditC9 Raw materials ()777) =ebit6 material #rice variance (7) =ebit=9 Raw materials 1)27) =ebit6 material #rice variance (7) =ebit

Ans: = AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: (6 2 $evel: /edium

Solution:

Raw materials J /aterials #urchased F Standard cost J )777 F 7.* J 1)27/aterials #rice variance J 8Actual +uantit' #urchased F Actual #rice9 L 8Actual+uantit' #urchased F Standard #rice9 J 8)777 F 7.,79 L 8)777 F 7.*9 J (7unfavorable

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-$




171. The ournal entr' to record the use of direct materials in #roduction last #eriod wouldinclude:

A9 ork in #rocess 1),77) =ebit6 material +uantit' variance 12) =ebitB9 ork in #rocess 1)2) =ebit6 material +uantit' variance 12) CreditC9 ork in #rocess 1),77) =ebit6 material +uantit' variance 12) Credit=9 ork in #rocess 1)2) =ebit6 material +uantit' variance 12) =ebit

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: (6 2 $evel: /edium

Solution:

Standard +uantit' J Standard +uantit' #er unit F Actual out#ut J F 577 J ,)77

ork in #rocess J Standard +uantit' F Standard #rice F Actual out#utJ F 7.* F 577 J 1)2/aterial +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9J 7.* F 8,)777 L ,)779 J 12 favorable

17(. The ournal entr' to record the incurrence of direct labor cost last #eriod wouldinclude:A9 ork in #rocess 2)(77) =ebit6 labor efficienc' variance ,77) CreditB9 ork in #rocess 2)(77) =ebit6 labor efficienc' variance ,77) =ebitC9 ork in #rocess 0)477) =ebit6 labor rate variance ,() =ebit=9 ork in #rocess 0)477) =ebit6 labor rate variance ,() Credit

Ans: A AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: *6 2 $evel: /edium

Solution:

Standard hours J Standard hours #er unit F Actual out#ut J 1 F 577 J 577ork in #rocess J Standard +uantit' F Standard #rice F Actual out#utJ 1 F 4 F 577 J 2)(77$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9J 4 F 847 L 5779 J ,77 favorable

10-%0 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




Dse the following to answer +uestions 17*170:

8A##endi-9 The Hohnson Com#an' makes a single #roduct called a ef. The com#an' uses astandard cost s'stem and has established the following standards for one ef:

Standard ?uantit'or 3ours

Standard Cost #er ef

=irect materials.................................... , gallons 17=irect labor.......................................... 7. hours >ariable manufacturing overhead........ 7. hours (

There was no direct materials inventor' on Hune 1. >ariable manufacturing overhead isassigned on the basis of direct labor hours. The following events occurred in Hune:

• urchased )777 gallons of direct materials at a cost of 1*)777

• Dsed ,)277 gallons of direct materials to #roduce 1)(77 efs

• Dsed 027 hours of direct labor at a cost of 0)*0

• Incurred ()17 in variable manufacturing overhead cost

17*. The ournal entr' to record the material +uantit' variance for Hune would include:A9 /aterial +uantit' variance 77) debitB9 /aterial +uantit' variance (7) creditC9 /aterial +uantit' variance (7) debit=9 /aterial +uantit' variance 14) credit


Solution:

Standard #rice #er gallon J Standard #rice #er ef K Standard +uantit' #er ef J 17 K , J (.7Standard +uantit' J Standard +uantit' #er unit F Actual out#utJ , F 1)(77 J ,)477/aterial +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9

J (.7 F 8,)277 L ,)4779 J (7 favorable

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-%1




17,. The ournal entr' to record the labor efficienc' variance for Hune would include:A9 $abor efficienc' variance 277) credit

B9 $abor efficienc' variance 277) debitC9 $abor efficienc' variance ,*7) debit=9 $abor efficienc' variance 547) credit

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: *6 2 $evel: /edium

Solution:

Standard rate #er hour J Standard #rice #er ef K Standard hours #er ef J K 7. J 17

Standard hours J Standard hours #er unit F Actual out#utJ 7. F 1)(77 J 077$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9J 17 F 8027 L 0779 J 277 unfavorable

17. The amount debited to ork in rocess to record the use of direct materials in #roduction in Hune is:A9 1*)777B9 11)27C9 1()777=9 1*)(7

Ans: C AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: (6 2 $evel: /edium

Solution:

ork in #rocess J Standard #rice #er ef F Actual out#utJ 17 F 1)(77 J 1()777

10-%! Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




170. The amount credited to =irect /aterials Inventor' to record the use of direct materialsin Hune is:

A9 1()77B9 11)27C9 1()777=9 17)27


Solution:

Standard #rice #er gallon J Standard #rice #er ef K Standard +uantit' #er ef

J 17 K , J (.7Raw materials J Raw materials used F Standard #rice #er gallonJ ,)277 F (.7 J 11)27


Soll' Com#an' #roduces a #roduct for national distribution. Standards for the #roduct are:

• /aterials: 1( ounces #er unit at 07W #er ounce.

• $abor: ( hours #er unit at 4 #er hour.

=uring the month of =ecember) the com#an' #roduced 1)777 units. Information for the monthfollows:

• /aterials: 1,)777 ounces #urchased and used at a total cost of 2)277.

• $abor: ()77 hours worked at a total cost of (7)0(.

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-%"




172. The material #rice variance is:A9 277 D

B9 077 !C9 077 D=9 277 !

Ans: = AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: &as'

Solution:

/aterial #rice variance J 8Actual +uantit' #urchased F Actual #rice9 L 8Actual+uantit' #urchased F Standard #rice9

J 2)277 L 81,)777 F 7.079 J 277 favorable

174. The material +uantit' variance is:A9 1)(77 DB9 1)177 DC9 1)177 !=9 1)(77 !

Ans: A AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: &as'

Solution:

Standard +uantit' J Standard +uantit' #er unit F Actual out#utJ 1( F 1)777 J 1()777/aterial +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9J 7.07 F 81,)777 L 1()7779 J 1)(77 unfavorable

10-%# Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




175. The labor rate variance is:A9 0( D

B9 77 !C9 77 D=9 0( !


Solution:

$abor rate variance J 8Actual hours F Actual rate9 L 8Actual hours F Standard rate9J (7)0( L 8()77 F 49 J 0( unfavorable

117. The labor efficienc' variance is:A9 ,)777 !B9 ,)1( !C9 ,)1( D=9 ,)777 D


Solution:

Standard hours J Standard hours #er unit F Actual out#utJ ( F 1)777 J ()777$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9J 4 F 8()77 L ()7779 J ,)777 unfavorable

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-%$




Dse the following to answer +uestions 11111*:

=udle') Inc. makes a single #roduct which has the following standards:

• =irect materials: ( kilograms at ,.*7 #er kilogram

• =irect labor: * hours at 0 #er hour

• >ariable manufacturing overhead: 15.7 #er unit of out#ut

At the beginning of Hune there were no inventories. The following data #ertain to HuneEso#erations:

• =irect labor was 4(7)77 for 1,2)777 hours worked.

• =irect material #urchases were 117)777 kilograms for ,4)777.

• >ariable manufacturing overhead incurred was 540)777.

• 5()777 kilograms of direct materials were used.

• The com#an' sold ,()777 units at 1*7 each.

• >ariable manufacturing overhead is a##lied based on direct labor hours.

• ,0)777 units were #roduced during the 'ear.

111. The material #rice variance is:A9 45),77 !B9 45),77 DC9 1()777 !

=9 1()777 D


Solution:

/aterial #rice variance J 8urchase +uantit' F Actual #rice9 L 8urchase +uantit' FStandard #rice9 J ,4)777 L 8117)777 F ,.*79 J 1()777 unfavorable

10-%% Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




11(. The material +uantit' variance is:A9 22),77 D

B9 7C9 1,)477 !=9 1,)477 D


Solution:

Standard +uantit' J Standard hours #er unit F Actual out#utJ ( F ,0)777 J 5()777

/aterial +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9J ,.*7 F 85()777 L 5()7779 J 7

11*. The labor rate variance is:A9 01)77 DB9 ,)777 DC9 ,)777 !=9 01)77 !


Solution:

$abor rate variance J 8Actual hours F Actual rate9 L 8Actual hours F Standard rate9J 4(7)77 L 81,2)777 F 09 J 01)77 favorable

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-%7




Dse the following to answer +uestions 11,112:

8A##endi-9 Scha#er Cor#oration has #rovided the following data concerning its mostim#ortant raw material) com#ound =*7X:

Standard cost) #er liter.................................................... ,4.47Standard +uantit') liters #er unit of out#ut...................... 0.7Cost of material #urchased in =ecember) #er liter.......... ,5.27/aterial #urchased in =ecember) liters.......................... *)177/aterial used in #roduction in =ecember) liters............. ()*47Actual out#ut in =ecember) units.................................... ,77

The raw material was #urchased on account.

11,. The debits to the Raw /aterials account for =ecember would total:A9 112)1(7B9 1,)727C9 110)1,,=9 11)(47


Solution:

Raw materials J /aterial #urchased in =ecember) liters F Cost #er liter J *)177 F ,4.47 J 11)(47

11. The credits to the Raw /aterials account for =ecember would total:A9 110)1,,B9 11)(47C9 112)1(7=9 1,)727


AICA !": Re#orting $%: (6 2 $evel: /edium

Solution:

Raw materials J /aterial used in #roduction in =ecember) liters F Cost #er liter J ()*47 F ,4.47 J 110)1,,

10-%8 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




110. The /aterials rice >ariance for =ecember would be recorded as a:A9 Credit of ()1,(

B9 Credit of ()257C9 =ebit of ()1,(=9 =ebit of ()257


Solution:

/aterials #rice variance J /aterial #urchased in =ecember) liters F 8Actual #rice LStandard #rice9 J *)177 F 8,5.27 L ,4.479 J (257

112. The /aterials ?uantit' >ariance for =ecember would be recorded as a:A9 Credit of 520B9 Credit of *)1*0C9 =ebit of *)1*0=9 =ebit of 520

Ans: A AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: (6 2 $evel: /edium

Solution:

Standard +uantit' J Standard +uantit' #er unit F Actual out#utJ 0 F ,77 J (),77/aterials +uantit' variance J Standard #rice F 8/aterial used in #roduction in=ecember) liters L Standard +uantit'9 J ,4.47 F 8()*47 L (),779 J 520 favorable

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-%




Dse the following to answer +uestions 1141(1:

8A##endi-9 Com#ound ?4*C is a raw material used to make /ctier Cor#orationEs maor #roduct. The standard cost of com#ound ?4*C is (*.27 #er ounce and the standard +uantit'is 2.( ounces #er unit of out#ut. =ata concerning the com#ound for Hanuar' a##ear below:

Cost of material #urchased in Hanuar') #er ounce........... (*.17/aterial #urchased in Hanuar') ounces........................... 1),77/aterial used in #roduction in Hanuar') ounces.............. 0(7Actual out#ut in Hanuar') units........................................ 177


114. The debits to the Raw /aterials account for Hanuar' would total:A9 **)147B9 12)70,C9 1,)05,=9 *()*,7

Ans: A AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: (6 2 $evel: /edium

Solution:

Raw materials J /aterial #urchased in Hanuar') ounces F Cost #er ounceJ 1),77 F (*.27 J **)147

115. The credits to the Raw /aterials account for Hanuar' would total:A9 **)147B9 1,)05,C9 *()*,7=9 12)70,


Solution:

Raw materials J /aterial used in #roduction in Hanuar') ounces F Standard costJ 0(7 F (*.27 J 1,)05,





1(7. The /aterials rice >ariance for Hanuar' would be recorded as a:A9 Credit of *2(

B9 Credit of 4,7C9 =ebit of 4,7=9 =ebit of *2(


Solution:

/aterials #rice variance J /aterial #urchased in Hanuar') ounces F 8Actual #rice LStandard #rice9 J 1),77 F 8(*.17 L (*.279 J 4,7 favorable

1(1. The /aterials ?uantit' >ariance for Hanuar' would be recorded as a:A9 =ebit of 14),40B9 Credit of 14),40C9 =ebit of ()*27=9 Credit of ()*27


Solution:

Standard +uantit' J Standard +uantit' #er unit F Actual out#utJ 2.( F 177 J 2(7/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9 J(*.27 F 80(7 L 2(79 J ()*27 favorable





Dse the following to answer +uestions 1((1(*:

The following materials standards have been established for a #articular #roduct:

Standard +uantit' #er unit of out#ut.......... *.( metersStandard #rice............................................ 1*.,7 #er meter


Actual materials #urchased........................ ,)077 metersActual cost of materials #urchased............ 5)477Actual materials used in #roduction.......... ,),77 metersActual out#ut.............................................. 1)*77 units

1((. hat is the materials #rice variance for the month<A9 1)4,7 DB9 1)207 DC9 1)207 !=9 1)4,7 !


Solution:

/aterials #rice variance J 8Actual materials #urchased F Actual #rice9 L 8urchaseActual materials #urchased F Standard #rice9 J 5)477 L 8,)077 F 1*.,79 J 1)4,7favorable





1(*. hat is the materials +uantit' variance for the month<A9 ()047 D

B9 *)1(7 DC9 ()077 D=9 *)(10 D


Solution:

Standard +uantit' J Standard +uantit' #er unit F Actual out#utJ *.( F 1)*77 J ,)107

/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9 J1*.,7 F 8,),77 L ,)1079 J *)(10 unfavorable

Dse the following to answer +uestions 1(,1(:

The Bowden Com#an' makes a single #roduct. %nl' one kind of direct material is used tomake this #roduct. The com#an' uses a standard cost s'stem. The com#an'Es cost records forHune show the following data:

"umber of units #roduced..... .... ... . 17)777/aterial #rice variance.................. 4),77 !avorable

/aterial +uantit' variance............. 4)777 DnfavorableActual direct material used............ (1)777 #ounds=irect materials standard #rice. .. .. . 4 #er #ound





1(,. The standard cost of direct material for one unit of out#ut is:A9 (

B9 10C9 4=9 17

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: 3ard

Solution:

/aterials +uantit' variance J Standard #rice F Actual +uantit' L 8Standard +uantit' #er unit F Actual out#ut9

4)777 J 4 F (1)777 L 8Standard +uantit' #er unit F 17)7779Standard +uantit' #er unit J (Standard cost #er unit J Standard #rice #er #ound F Standard +uantit' #er unitJ 4 F ( J 10

1(. If the amount of direct material bought in Hune e+uals the amount of direct materialused in Hune) then the actual cost of direct material #er #ound is:A9 4.1(B9 4.77C9 2.07=9 2.,(

Ans: C AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: ( $evel: 3ard

Solution:

/aterials #rice variance J Actual +uantit' F 8Actual #rice L Standard #rice9L4),77 J (1)777 F 8Actual #rice L 49Actual #rice J 2.07





Dse the following to answer +uestions 1(01(4:

8A##endi-9 /ilnes Cor#oration has #rovided the following data concerning its direct laborcosts for "ovember:

Standard wage rate............. 1*.,7 #er =$3Standard hours......... .. .. .. .. .. .7 =$3s #er unitActual wage rate................ 1,.77 #er =$3Actual hours....................... (7)1(7 =$3sActual out#ut...................... ,)(77 units

1(0. The ournal entr' to record the incurrence of direct labor costs in "ovember wouldinclude the following for ork in rocess:

A9 =ebit of (41),77B9 Credit of (41)047C9 Credit of (41),77=9 =ebit of (41)047


Solution:

ork in #rocess J Standard rate F Standard hours F Actual out#ut

J 1*.,7 F F ,)(77 J (41),77

1(2. The $abor Rate >ariance for "ovember would be recorded as a:A9 =ebit of 1()72(B9 =ebit of 1()077C9 Credit of 1()72(=9 Credit of 1()077


Solution:

$abor rate variance J 8Actual hours F Actual rate9 L 8Actual hours F Standard rate9J 8(7)1(7 F 1,9 L 8(7)1(7 F 1*.,79 J 1()72( unfavorable





1(4. The $abor &fficienc' >ariance for "ovember would be recorded as a:A9 =ebit of 1()*(7

B9 =ebit of 11)25(C9 Credit of 11)25(=9 Credit of 1()*(7

Ans: C AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: *6 2 $evel: /edium

Solution:

Standard hours J Standard hours #er unit F Actual out#utJ F ,)(77 J (1)777

$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9J 1*.,7 F 8(7)1(7 L (1)7779 J 11)25( favorable

Dse the following to answer +uestions 1(51*1:

8A##endi-9 Santiesteban Cor#orationEs standard wage rate is 1*.77 #er direct laborhour8=$39 and according to the standards) each unit of out#ut re+uires 2.5 =$3s. In /arch) 4)077units were #roduced) the actual wage rate was 1(.*7 #er =$3) and the actual hours were0)077 =$3s.

1(5. In the ournal entr' to record the incurrence of direct labor costs in /arch) the ork in

rocess entr' would consist of a:A9 credit of 470)447.B9 debit of 470)447.C9 debit of 44*)((7.=9 credit of 44*)((7.


Solution:

ork in #rocess J Standard rate F Standard hours F Actual out#utJ 1* F 2.5 F 4)077 J 44*)((7





1*7. The $abor Rate >ariance for /arch would be recorded as a:A9 debit of ,2)4.

B9 debit of ,)5(7.C9 credit of ,2)4.=9 credit of ,)5(7.

Ans: = AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: *6 2 $evel: /edium

Solution:

$abor rate variance J Actual hours F 8Actual rate L Standard rate9J 0)077 F 81(.*7 L 1*.779 J ,)5(7 favorable

1*1. The $abor &fficienc' >ariance for /arch would be recorded as a:A9 debit of (4)24(.B9 debit of *7),(7.C9 credit of *7),(7.=9 credit of (4)24(.


Solution:

Standard hours J Standard hours #er unit F Actual out#utJ 2.5 F 4)077 J 02)5,7$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9J 1* F 80)077 L 02)5,79 J *7),(7 favorable





Dse the following to answer +uestions 1*(1**:

The following labor standards have been established for a #articular #roduct:

Standard labor hours #er unit of out#ut................. ,.( hoursStandard labor rate................................................. 1*.07 #er hour


Actual hours worked.......... ()577 hoursActual total labor cost........ *4)21Actual out#ut...................... 477 units

1*(. hat is the labor rate variance for the month<A9 2( !B9 (77 DC9 (77 !=9 2( D


Solution:

$abor rate variance J 8Actual hours F Actual rate9 L 8Actual hours F Standard rate9J *4)21 L 8()577 F 1*.079 J 2( favorable

1**. hat is the labor efficienc' variance for the month<A9 0)541 DB9 0)(0 !C9 0)1,1 !=9 0)541 !

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: * $evel: &as'

Solution:

Standard hours J Standard hours #er unit F Actual out#utJ ,.( F 477 J *)*07$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9J 1*.07 F 8()577 L *)*079 J 0)(0 favorable





Dse the following to answer +uestions 1*,1*:

The following standards for variable manufacturing overhead have been established for acom#an' that makes onl' one #roduct:

Standard hours #er unit of out#ut............... .( hoursStandard variable overhead rate................. 1,.17 #er hour


Actual hours............................................... 0),77 hoursActual total variable overhead cost............ 44)*(7Actual out#ut.............................................. 1)(77 units

1*,. hat is the variable overhead s#ending variance for the month<A9 **0 !B9 **0 DC9 1)5(7 !=9 1)5(7 D

Ans: C AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: , $evel: &as'

Solution:

>ariable overhead s#ending variance J 8Actual hours F Actual rate9 L 8Actual hours FStandard rate9 J 44)*(7 L 80),77 F 1,.179 J 1)5(7 favorable





1*. hat is the variable overhead efficienc' variance for the month<A9 ()(74 !

B9 ()(0 DC9 1)42( D=9 ()(74 D


Solution:

Standard hours J Standard hours #er unit F Actual out#utJ .( F 1)(77 J 0)(,7

>ariable overhead efficienc' variance J Standard rate F 8Actual hours L Standard+uantit'9 J 1,.17 F 80),77 L 0)(,79 J ()(0 unfavorable

Dse the following to answer +uestions 1*01*2:

olk Cor#oration is a highl' automated manufacturing com#an'. The vice #resident offinance has decided that traditional standards are ina##ro#riate for #erformance measures inan automated environment. $abor is insignificant in terms of the total cost of #roduction andtends to be fi-ed. /aterial +ualit' is considered more im#ortant than minimiing materialcost. And customer satisfaction is the number one #riorit'. As a result) deliver' #erformancemeasures have been chosen to evaluate manufacturing #erformance. The following data are

considered to be t'#ical of the time to com#lete orders.

• ait time to the start of #roduction: 17.7 da's

• Ins#ection time: 1. da's

• rocess time: *.7 da's

• ?ueue time during the #roduction #rocess: .7 da's

• /ove time: (. da's





1*0. The manufacturing c'cle efficienc' is closest to:A9 (.7;

B9 1*.0;C9 *2.;=9 05.(;

Ans: A AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: 0 $evel: /edium Source: C/A) ada#ted

Solution:

/C& J rocess time K Through#ut timeJ rocess time K 8rocess time P Ins#ection time P /ove time P ?ueue time9

J * K 8* P 1. P (. P 9 J (.7;

1*2. The deliver' c'cle time is closest to:A9 2 da'sB9 1( da'sC9 15 da's=9 (( da's

Ans: = AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: 0 $evel: /edium Source: C/A) ada#ted

Solution:

=eliver' c'cle time J ait time P Through#ut timeJ ait time P 8rocess time P Ins#ection time P /ove time P ?ueue time9J 17 P 8* P 1. P (. P 9 J ((

Dse the following to answer +uestions 1*41*5:

The management of International Cookwares believes that deliver' #erformance measuresmust be im#roved if the com#an' is to maintain its com#etitive edge. The following data areconsidered to be t'#ical of the time to com#lete orders.

• rocess time: ,.7 da's

• ait time to the start of #roduction: 1.7 da's

• /ove time: *.7 da's

• Ins#ection time: (.7 da's

• ?ueue time during the #roduction #rocess: 4.7 da's





1*4. hat is the manufacturing c'cle efficienc'<A9 1(.;

B9 (*.0;C9 20.,;=9 42.;

Ans: B AACSB: Anal'tic AICA BB: Critical ThinkingAICA !": Re#orting $%: 0 $evel: /edium

Solution:

Through#ut time J rocess time P Ins#ection time P /ove time P ?ueue timeJ , P ( P * P 4 J 12

/C& J rocess time K Through#ut time J , K 12 J (*.0;

1*5. hat is the deliver' c'cle time<A9 , da'sB9 1 da'sC9 12 da's=9 *( da's


Solution:

Through#ut time J rocess time P Ins#ection time P /ove time P ?ueue timeJ , P ( P * P 4 J 12=eliver' c'cle time J ait time P Through#ut time J 1 P 12 J *(

Dse the following to answer +uestions 1,71,(:

ingcade Cor#oration kee#s careful track of the time re+uired to fill orders. =ata concerninga #articular order a##ear below:

3oursait time............................ 14.*rocess time....................... 1.1Ins#ection time................... 7.1/ove time.......................... (.7?ueue time......................... 5.1





1,7. The through#ut time was:A9 *7.0 hours

B9 *.( hoursC9 (2., hours=9 1(.* hours


Solution:

Through#ut time J rocess time P Ins#ection time P /ove time P ?ueue timeJ 1.1 P 7.1 P (.7 P 5.1 J 1(.*

1,1. The manufacturing c'cle efficienc' 8/C&9 was closest to:A9 7.75B9 7.1(C9 7.02=9 7.7,


Solution:

Through#ut time J rocess time P Ins#ection time P /ove time P ?ueue timeJ 1.1 P 7.1 P (.7 P 5.1 J 1(.*/C& J rocess time K Through#ut time J 1.1 K 1(.* J 7.75

1,(. The deliver' c'cle time was:A9 *7.0 hoursB9 ( hoursC9 (5., hours=9 11.1 hours


Solution:

Through#ut time J rocess time P Ins#ection time P /ove time P ?ueue timeJ 1.1 P 7.1 P (.7 P 5.1 J 1(.*=eliver' c'cle time J ait time P Through#ut time J 14.* P 1(.* J *7.0





Dse the following to answer +uestions 1,*1,:

Rotan Cor#oration kee#s careful track of the time re+uired to fill orders. The times recordedfor a #articular order a##ear below:

3ours/ove time.............. *.(ait time................ 17.5?ueue time............. .1rocess time......... .. 1.(Ins#ection time....... 7.(

1,*. The deliver' c'cle time was:

A9 15.( hoursB9 (7.0 hoursC9 4.* hours=9 *.( hours


Solution:

Through#ut time J rocess time P Ins#ection time P /ove time P ?ueue time

J 1.( P 7.( P *.( P .1 J 5.2=eliver' c'cle time J ait time P Through#ut timeJ 17.5 P 5.2 J (7.0

1,,. The through#ut time was:A9 ,.0 hoursB9 5.2 hoursC9 (7.0 hours=9 10 hours

Ans: B AACSB: Anal'tic AICA BB: Critical Thinking

AICA !": Re#orting $%: 0 $evel: &as'

Solution:

Through#ut time J rocess time P Ins#ection time P /ove time P ?ueue timeJ 1.( P 7.( P *.( P .1 J 5.2





1,. The manufacturing c'cle efficienc' 8/C&9 was closest to:A9 7.45

B9 7.70C9 7.(5=9 7.1(


Dse the following to answer +uestions 1,01,2:

Bulkbo' !itness &+ui#ment) Inc. was recentl' created to #roduce and sell its NBice#tionO armmachine. Bulkbo' decided to use a standard cost s'stem to record costs related to the

#roduction of this #roduct. The material standard for each machine #roduced is 1.1 #ounds ofa s#ecial aluminum tubing at a standard cost of 1( #er #ound.

=uring the first month of o#erations) Bulkbo' #urchased ()777 #ounds of this aluminumtubing at 11 #er #ound. Bulkbo' used (()777 #ounds to #roduce (7)(7 Bice#tion machines.

1,0. hat is the balance in Bulkbo'Es materials inventor' account at the end of the firstmonth of o#erations<A9 11)777B9 *()277C9 **)777

=9 *0)777


Solution:

&nding inventor' of raw materials J 8Raw materials #urchased L Raw materials used9F Standard #rice J 8()777 L (()7779 F 1( J *0)777





1,2. 3ow much material cost should Bulkbo' have assigned to work in #rocess during thefirst month of o#erations<

A9 (,*)777B9 (,)7(C9 (0,)777=9 (02)*77


Solution:

ork in #rocess J Standard #rice F Standard +uantit' F Actual out#ut

J 1( F 1.1 F (7)(7 J (02)*77





Essay Questions

1,4. Ra#oni Cor#oration is develo#ing standards for its #roducts. %ne #roduct re+uires anin#ut that is #urchased for 47.77 #er kilogram from the su##lier. B' #a'ing cash) thecom#an' gets a discount of *; off this #urchase #rice. Shi##ing costs from thesu##lierEs warehouse amount to 0.00 #er kilogram. Receiving costs are 7., #erkilogram. &ach unit of out#ut re+uires 7.40 kilogram of this in#ut. The allowance forwaste and s#oilage is 7.7 kilogram of this in#ut for each unit of out#ut. Theallowance for reects is 7.75 kilogram of this in#ut for each unit of out#ut.

Re+uired:

a. =etermine the standard #rice #er kilogram of this in#ut. Show 'our workY

b. =etermine the standard kilograms of this in#ut #er unit of out#ut. Show 'ourworkY

Ans:

a. Standard #riceurchase #rice................................................................. 47.77$ess cash discount........................................................... 8(.,79Shi##ing costs from the su##lierGs warehouse................ 0.00Receiving costs................................................................ 7.,

Standard #rice #er kilogram............................................ 4,.21

b. Standard +uantit'/aterial re+uirement #er unit of out#ut) in kilograms.... 7.40Allowance for waste and s#oilage) in kilograms............. 7.7Allowance for reects) in kilograms................................ 7.75

Standard +uantit' #er unit of out#ut) in kilograms.......... 1.77

AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting$%: 1 $evel: &as'





1,5. ortsche Cor#oration is develo#ing standards for its #roducts. %ne #roduct re+uires anin#ut that is #urchased for 4,.77 #er kilogram from the su##lier. B' #a'ing cash) the

com#an' gets a discount of 5; off this #urchase #rice. Shi##ing costs from thesu##lierEs warehouse amount to 2., #er kilogram. Receiving costs are 7.7 #erkilogram.

Re+uired:

=etermine the standard #rice #er kilogram of this in#ut. Show 'our workY

Ans:

urchase #rice........................................................ 4,.77

$ess cash discount.................................................. 82.09Shi##ing costs from the su##lierGs warehouse....... 2.,Receiving costs...................................................... 7.7

Standard #rice #er kilogram................................... 4,.7*


17. Behunin Cor#oration is develo#ing standards for a #roduct. &ach unit of out#ut of the #roduct re+uires 7.,7 kilogram of a #articular in#ut. The allowance for waste ands#oilage is 7.72 kilogram of this in#ut for each unit of out#ut. The allowance for

reects is 7.11 kilogram of this in#ut for each unit of out#ut.

Re+uired:

=etermine the standard kilograms of this in#ut #er unit of out#ut. Show 'our workY

Ans:

/aterial re+uirement #er unit of out#ut) in kilograms.... 7.,7Allowance for waste and s#oilage) in kilograms............ 7.72Allowance for reects) in kilograms................................ 7.11

Standard +uantit' #er unit of out#ut) in kilograms......... 7.4






11. Hiles Cor#oration is develo#ing direct labor standards. The basic direct labor wage rateis 1(.,7 #er hour. &m#lo'ment ta-es are 11; of the basic wage rate. !ringe benefits

are *.1 #er hour. A #articular #roduct re+uires 7.4* direct laborhours #er unit. Theallowance for breaks and #ersonal needs is 7.7* direct laborhours #er unit. Theallowance for cleanu#) machine downtime) and reects is 7.17 direct laborhours #erunit.

Re+uired:

a. =etermine the standard rate #er direct laborhour. Show 'our workY b. =etermine the standard direct laborhours #er unit of #roduct. Show 'our workYc. =etermine the standard labor cost #er unit of #roduct to the nearest cent. Show

'our workY

Ans:

a. Standard rate #er direct laborhour:Basic wage rate #er hour.................................................... 1(.,7&m#lo'ment ta-es.............................................................. 1.*0!ringe benefits.................................................................... *.1

Standard rate #er direct laborhour..................................... 12.(2

b. Standard directlabor hours #er unit of out#ut:Basic labor time #er unit.................................................... 7.4* =$3s

Allowance for breaks and #ersonal needs.......................... 7.7* =$3sAllowance for cleanu#) machine downtime) and reects.... 7.17 =$3s

Standard directlabor hours #er unit................................... 7.50 =$3s

c. Standard labor cost #er unit:Standard rate #er direct laborhour 8a9............................... 12.(2Standard directlabor hours #er unit 8b9............................. 7.50

Standard labor cost #er unit 8a9 F 8b9................................. 10.4






1(. Cantlow Cor#oration is develo#ing direct labor standards. The basic direct labor wagerate is 1*.7 #er hour. &m#lo'ment ta-es are 17; of the basic wage rate. !ringe

benefits are *.50 #er hour.

Re+uired:

=etermine the standard rate #er direct laborhour. Show 'our workY

Ans:

Basic wage rate #er hour.......................... 1*.7&m#lo'ment ta-es.................................... 1.*1!ringe benefits......................................... *.50

Standard rate #er direct laborhour.......... 14.*(


1*. Bersch Cor#oration is develo#ing direct labor standards. A #articular #roduct re+uires7.04 direct laborhours #er unit. The allowance for breaks and #ersonal needs is 7.7,direct laborhours #er unit. The allowance for cleanu#) machine downtime) and reectsis 7.1* direct laborhours #er unit.

Re+uired:

=etermine the standard direct laborhours #er unit of #roduct. Show 'our workY

Ans:

Basic labor time #er unit..................................................... 7.04 =$3sAllowance for breaks and #ersonal needs.......................... 7.7, =$3sAllowance for cleanu#) machine downtime) and reects.... 7.1* =$3s

Standard directlabor hours #er unit................................... 7.4 =$3s

AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting

$%: 1 $evel: &as'





1,. $ido Com#an'Es standard and actual costs #er unit for the most recent #eriod) duringwhich 77 units were actuall' #roduced) are given below:

Standard Actual/aterials:

Standard: ( feet at 1.7 #er foot.................. *.77Actual: 1.5 feet at 1.07 #er foot.................. *.7,

=irect labor:Standard: 1. hours at 0.77 #er hour........... 5.77Actual: 1.2 hours at 0.*7 #er hour.............. 17.21

>ariable manufacturing overhead:Standard: 1. hours at *.,7 #er hour........... .17Actual: 1.2 hours at *.77 #er hour.............. .17

Total unit cost................................................... 12.17 14.4

All of the material #urchased during the #eriod was used in #roduction during the #eriod.

Re+uired:

!rom the foregoing information) com#ute the following variances. Indicate whetherthe variance is favorable 8!9 or unfavorable 8D9:a. /aterial #rice variance. b. /aterial +uantit' variance.

c. =irect labor rate variance.d. =irect labor efficienc' variance.e. >ariable overhead s#ending variance.f. >ariable overhead efficienc' variance.





Ans:

a. Z b. Raw /aterials:rice variance J A?8A L S9 8based on +uantit' #urchased9J [5781.07 L 1.79 J 5 D

[ A? J 1.5 feet #er unit F 77 units J 57 feet

?uantit' variance J S8A? L S?9 8based on +uantit' used9J 1.7857 L [1)7779 J 2 !

[ S? J ( feet #er unit F 77 units J 1)777 feet

c. Z d. =irect $abor:Rate variance J A38AR L SR9 J [4780.*7 L 0.779 J ( D

[ A3 J 1.2 hours #er unit F 77 units J 47 hours

&fficienc' variance J SR8A3 L S39 J 0.77847 L [279 J 077 D

[ S3 J 1. hours #er unit F 77 units J 27 hours

e. Z f. >ariable %verhead:S#ending variance J A38AR L SR9 J 478*.77 L *.,79 J *,7 !

&fficienc' variance J SR8A3 L S39 J *.,7847 L 279 J *,7 D

AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting$%: (6 *6 , $evel: /edium

10-! Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




1. Bronfenbrenner Co. uses a standard cost s'stem for its single #roduct in whichvariable overhead is a##lied on the basis of direct labor hours. The following

information is given:

Standard costs #er unit:Raw materials 81. grams at 10 #er gram9............................. (,.77=irect labor 87.2 hours at 4 #er hour9.................................. 0.77>ariable overhead 87.2 hours at * #er hour9......................... (.(

Actual e-#erience for current 'ear:Dnits #roduced......................................................................... ((),77 unitsurchases of raw materials 8(1)777 grams at 12 #er gram9... *2)777Raw materials used.................................................................. **),77 grams

=irect labor 810)27 hours at 4 #er hour9.............................. 1*,)777>ariable overhead cost incurred............................................... ,4)2

Re+uired:

Com#ute the following variances for raw materials) direct labor) and variableoverhead) assuming that the #rice variance for materials is recognied at #oint of #urchase:a. =irect materials #rice variance. b. =irect materials +uantit' variance.c. =irect labor rate variance.

d. =irect labor efficienc' variance.e. >ariable overhead s#ending variance.f. >ariable overhead efficienc' variance.

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-"




Ans:

a. Z b. Raw /aterials:rice variance J A?8A L S9 8based on +uantit' #urchased9J (1)777 812 L 109 J (1)777 D

?uantit' variance J S8A? L S?9 8based on +uantit' used9J 108**),77 L [**)0779 J *)(77 !

[ S? J ((),77 units at 1. grams #er unit J **)077

c. Z d. =irect labor:Rate variance J A38AR L SR9 J 10)2784 L 49 J 7

&fficienc' variance J SR8A3 L S39 J 4810)27 L [10)4779 J ,77 !

[ S3 J ((),77 units at 7.2 hours #er unit J 10)477

e. Z f. >ariable overhead:S#ending variance J A38AR L SR9 J 10)278[(.57 L *9 J 1)02 !

[ AR J ,4)2 V 10)27 hours J (.57

&fficienc' variance J SR8A3 L S39 J *810)27 L [10)4779 J 17 !

[ S3 J ((),77 units at 7.2 hours #er unit J 10)477

AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting$%: (6 *6 , $evel: /edium

10-# Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




10. Allen Com#an' #roduces and sells a single #roduct. Standards for materials and laborfollow:

• =irect materials: ,.4 ounces U *.7 #er ounce J 10.47

• =irect labor: 1., hours U 17 #er hour J 1,.77

The com#an' recognies the materials #rice variance at the time materials are #urchased. =ata relating to #roduction for the last month follow:

roduction in units................................................. 1)77=irect materials #urchased 817)777 ounces9.......... *4)77=irect materials used 84)777 ounces9..................... <=irect labor cost 8()777 hours9.............................. (*)777

Re+uired:

re#are ournal entries to record:a. The #urchase of materials. b. The usage of materials in #roduction.c. The incurrence of direct labor cost.

Ans:

a. Raw /aterials 817)777 ounces U *.7 #er ounce9 *)777

/aterials rice >ariance817)777 ounces U 7.* #er ounce D9 *)77

Accounts a'able *4)77

b. ork in rocess 82)(77 ounces U *.7 #er ounce9 ()(77/aterials ?uantit' >ariance

8477 ounces D U *.7 #er ounce9 ()477Raw /aterials 84)777 ounces U *.7 #er ounce9 (4)777

c. ork in rocess 8()177 hours U 17 #er hour9 (1)777$abor Rate >ariance 8()777 hours U 1.7 #er hour D9 *)777

$abor &fficienc' >ariance8177 hours ! U 17 #er hour9 1)777

ages a'able 8()777 hours U 11.7 #er hour9 (*)777

AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#ortingA##endi-: 17 $%: (6 *6 2 $evel: /edium

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-$




12. A #artial standard cost card for the single #roduct #roduced b' /ercer Com#an' isgiven below:

• =irect materials: * #ounds U 4 #er #ound

• =irect labor: < hours U < #er hour

$ast #eriod the com#an' #roduced ,)777 units of #roduct. Cost and other dataassociated with this #roduction are given below:

=irect materials #urchased and used) at cost..... . 17*)*(7=irect labor cost incurred 817),77 hours9........... 1(7)0,7/aterials #rice variance...................................... ()(7 Dnfavorable$abor efficienc' variance.................................... ,)477 Dnfavorable

Total labor variance............................................. 0,7 Dnfavorable

Re+uired:

a. =etermine the number of #ounds of direct materials #urchased and used during the #eriod.

b. =etermine the materials +uantit' variance.c. =etermine the standard direct labor rate #er direct labor hour.d. =etermine the standard hours allowed for the #roduction of the #eriod.

10-% Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition




Ans:

a. Cost of materials #urchased and used................. 17*)*(7=educt unfavorable #rice variance...................... ()(7

/aterials used at standard #rice.......................... 177)477

177)477 K 4 #er #ound J 1()077 #ounds

b. /aterials +uantit' variance J S 8A? L S?9J 481()077 L 1()777[9 J ,)477 D

[,)777 units F * #oundsVunit J 1()777 #ounds

c. If the total labor variance is 0,7 D) and if the labor efficienc' variance is ,)477D) then the labor rate variance must be ,)107 !. Therefore:

A3 8AR L SR9 J $abor rate variance17),77811.07[ L SR9 J ,)107 !1(7)0,7 L 17),77 SR J ,)10717),77 SR J 1(,)477SR J 1(

[1(7)0,7 K 17),77 hours J 11.07.

d. SR 8A3 L S39 J $abor efficienc' variance1( 817),77 L S39 J ,)477 D1(,)477 L 1( S3 J ,)4771( S3 J 1(7)777S3 J 17)777

AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting$%: (6 * $evel: 3ard





14. Qee Cor#oration has develo#ed the following cost standards for the #roduction of itsleather back#acks:

Standard Cost er Back#ack

$eather 87.5 'ards U (( #er 'ard9............................. 15.47=irect labor 81.* hours U 5.77 #er hour9................... 11.27>ariable overhead 81.* hours U 1.77 #er hour9....... 15.7

>ariable overhead at Qee is a##lied on the basis of direct labor hours. The actualresults for last month were as follows:

"umber of back#acks #roduced................. 1)777

=irect labor hours incurred........................ 14)477@ards of leather #urchased......................... 1,)77@ards of leather used in #roduction........... 1,)177Cost of leather #urchased........................... *70)02=irect labor cost......................................... 15)477>ariable overhead cost............................... (4)207

Re+uired:

Com#ute the following variances for Qee. Show and label 'our com#utations.a. /aterials #rice variance.

b. /aterials +uantit' variance.c. $abor efficienc' variance.d. >ariable overhead s#ending variance.

Ans:

a. /aterials #rice variance J *70)02 L 81,)77 F ((9 J 1()*( ! b. /aterials +uantit' variance J 81,)177 F ((9 L 81)777 F 7.5 F ((9

J 1*)(77 Dc. $abor efficienc' variance J 814)477 F 5.779 L 81)777 F 1.* F 5.779

J 0)*77 !

d. >ariable overhead s#ending variance J (4)207 L 814)477 F 1.779J *)207 D

AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting$%: (6 * $evel: /edium





15. The following standards have been established for a raw material used in the #roduction of #roduct =,*:

Standard +uantit' of the material #er unit of out#ut........ ,.7 #oundsStandard #rice of the material.......................................... 1,.17 #er #ound

The following data #ertain to a recent monthGs o#erations:

Actual material #urchased.................... 2)77 #oundsActual cost of material #urchased........ 174)27Actual material used in #roduction...... 2)(77 #oundsActual out#ut........................................ 1)447 units of #roduct =,*

Re+uired:

a. hat is the materials #rice variance for the month< b. hat is the materials +uantit' variance for the month<c. re#are ournal entries to record the #urchase and use of the raw material during

the month. 8All raw materials are #urchased on account.9

Ans:

a. /aterials #rice variance J 8A? F A9 L 8A? F S9J 174)27 L 82)77 F 1,.179 J *)777 D

b. /aterials +uantit' variance J S8A? L S?[9J 1,.1782)(77 L 2)(79 J ,)1( !

[S? J Standard +uantit' #er unit F Actual out#ut J ,.7 F 1)447 J 2)(7

c. Hournal entries to record the #urchase and use of the raw material:

Record the #urchase of the raw material:Raw /aterials 17)27/aterials rice >ariance *)777

Accounts a'able 174)27

Record the use of the raw material:ork In rocess 170)7*(

/aterials ?uantit' >ariance ,)1(Raw /aterials 171)(7

AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#ortingA##endi-: 17 $%: (6 2 $evel: /edium

Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-




107. The standards for #roduct T45 call for 2.( meters of a raw material that costs 11.27 #er meter. $ast month) 4)277 meters of the raw material were #urchased for 54)2,.

The actual out#ut of the month was 1)(77 units of #roduct T45. A total of 4)177 metersof the raw material were used to #roduce this out#ut.

Re+uired:

a. hat is the materials #rice variance for the month< b. hat is the materials +uantit' variance for the month<c. re#are ournal entries to record the #urchase and use of the raw material during

the month. 8All raw materials are #urchased on account.9

Ans:

a. /aterials #rice variance J 8A? F A9 L 8A? F S9J 54)2, L 84)277 F 11.279 J *)7, !

b. /aterials +uantit' variance J S8A? L S?[9J 11.2784)177 L 4)0,79 J 0)*14 !

[S? J Standard +uantit' #er unit F Actual out#ut J 2.( F 1)(77 J 4)0,7

c. Hournal entries to record the #urchase and use of the raw material:

Record the #urchase of the raw material:Raw /aterials 171)257/aterials rice >ariance *)7,Accounts a'able 54)2,

Record the use of the raw material:ork In rocess 171)744

/aterials ?uantit' >ariance 0)*14Raw /aterials 5,)227


A##endi-: 17 $%: (6 2 $evel: /edium





101. &gner Cor#oration has #rovided the following data concerning its most im#ortant rawmaterial) com#ound D**:

Standard cost) #er liter................................................. (0.47Standard +uantit') liters #er unit of out#ut................... 4.7Cost of material #urchased in %ctober) #er liter.......... (2.27/aterial #urchased in %ctober) liters........................... ()777/aterial used in #roduction in %ctober) liters............. 1)0,7Actual out#ut in %ctober) units.................................... (77


Re+uired:

a. Record the #urchase of the raw material in a ournal entr'. b. Record the use of the raw material in #roduction in a ournal entr'.

Ans:

a. &ntr' to record #urchase of materials:Raw /aterials 8()777 liters at (0.47 #er liter9 *)077/aterials rice >ariance 8()777 liters at 7.57 #er liter D9 1)477

Accounts a'able 8()777 liters at (2.27 #er liter9 ),77

b. &ntr' to record use of materials:Standard +uantit' allowed for the actual out#ut 8(77 units at 4.7 liters #er unit9 J1)077 liters

ork In rocess 81)077 liters at (0.47 #er liter9 ,()447/aterials ?uantit' >ariance 8,7 liters at (0.47 #er liter

D9 1)72(Raw /aterials 81)0,7 liters at (0.47 #er liter9 ,*)5(

AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#ortingA##endi-: 17 $%: (6 2 $evel: &as'





10(. Com#ound ?2T is used b' Cestone Cor#oration to make one of its #roducts. Thestandard cost of com#ound ?2T is ,0.77 #er ounce and the standard +uantit' is (.

#er unit of out#ut. =ata concerning the com#ound in the most recent month a##ear below:

Cost of material #urchased in Hul') #er ounce................. ,.*7/aterial #urchased in Hul') ounces.................................. 1)77/aterial used in #roduction in Hul') ounces.................... 1)*(7Actual out#ut in Hul') units.............................................. 077


Re+uired:

a. Record the #urchase of the raw material in a ournal entr'. b. Record the use of the raw material in #roduction in a ournal entr'.

Ans:

a. &ntr' to record #urchase of materials:Raw /aterials 81)77 ounces at ,0.77 #er ounce9 05)777

/aterials rice >ariance 81)77 ounces at 7.27 #erounce !9 1)77

Accounts a'able 81)77 ounces at ,.*7 #er ounce9 02)57

b. &ntr' to record use of materials:Standard +uantit' allowed for the actual out#ut 8077 units at (. ounces #er unit9 J1)77

ork In rocess 81)77 ounces at ,0.77 #er ounce9 05)777/aterials ?uantit' >ariance 8147 ounces at ,0.77

#er ounce !9 4)(47Raw /aterials 81)*(7 ounces at ,0.77 #er ounce9 07)2(7

AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#ortingA##endi-: 17 $%: (6 2 $evel: &as'





10*. Sile Com#an' uses a standard cost s'stem to collect costs related to the #roductionof its N"oStickO lawn chairs. The direct material for the chairs is teflon. Sile uses a

standard direct material cost of ,7.77 #er chair 87.4 #ounds of teflon at 7.77 #er #ound9. =uring A#ril) Sile #urchased ()177 #ounds of teflon for 170)2. Sileused 1)27 #ounds of this teflon in A#ril to #roduce 1)477 lawn chairs.

Re+uired:

Calculate SileEs materials #rice and materials +uantit' variances for A#ril. Then #re#are the ournal entries to record these variances.

Ans:

/aterials #rice variance J 170)2 L 8()177 F 7.779 J 1)2 D/aterials +uantit' variance J 81)27 F 79 L 81)477 F 7.4 F 79 J 1)77 D

Raw /aterials 17)777/aterial #rice variance 1)2

Accounts #a'able 170)2

ork in #rocess 2()777/aterial +uantit' variance 1)77

Raw materials 42)77

AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting$%: ( $evel: /edium





10,. The following materials standards have been established for a #articular #roduct:

Standard +uantit' #er unit of out#ut.......... 2.7 gramsStandard #rice............................................ 1(.07 #er gram


Actual materials #urchased........................ 5)77 gramsActual cost of materials #urchased............ 1(2)*77Actual materials used in #roduction.......... 5)777 gramsActual out#ut.............................................. 1)*,7 units

Re+uired:

a. hat is the materials #rice variance for the month< b. hat is the materials +uantit' variance for the month<

Ans:

/aterials #rice variance J 8A? F A9 L 8A? F S9J 1(2)*77 \ 85)77 F 1(.079 J 2)077 D

S? J Standard +uantit' #er unit F Actual out#ut J 2.7 F 1)*,7 J 5)*47

/aterials +uantit' variance J S8A? L S?9 J 1(.0785)777 \ 5)*479 J ,)244 !

AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting$%: ( $evel: &as'





10. The following standards have been established for a raw material used to make #roduct %4,:

Standard +uantit' of the material #er unit of out#ut....... 2.1 metersStandard #rice of the material......................................... 14.*7 #er meter

The following data #ertain to a recent monthGs o#erations:

Actual material #urchased.......................... *),77 metersActual cost of material #urchased.............. 0,)757Actual material used in #roduction............ *)177 metersActual out#ut.............................................. 77 units of #roduct %4,

Re+uired:


Ans:

a. /aterials #rice variance J 8A? F A9 L 8A? F S9J 0,)757 L 8*),77 F 14.*79 J 1)427 D

b. /aterials +uantit' variance J S8A? L S?[9

J 14.*78*)177 L *)79 J 4)(* !

[S? J Standard +uantit' #er unit F Actual out#ut J 2.1 F 77 J *)7






100. The standards for #roduct >(4 call for 2. #ounds of a raw material that costs 14.17 #er #ound. $ast month) 1),77 #ounds of the raw material were #urchased for (,)557.

The actual out#ut of the month was 107 units of #roduct >(4. A total of 1)*77 #oundsof the raw material were used to #roduce this out#ut.

Re+uired:


Ans:

a. /aterials #rice variance J 8A? F A9 L 8A? F S9

J (,)557 L 81),77 F 14.179 J *7 !

b. /aterials +uantit' variance J S8A? L S?[9J 14.1781)*77 L 1)(779 J 1)417 D

[S? J Standard +uantit' #er unit F Actual out#ut J 2. F 107 J 1)(77






102. The following direct labor standards have been established for #roduct /47A:

Standard direct laborhours............ 1.* hours #er unit of /47AStandard direct labor wage rate...... 1,.17 #er hour

The following data #ertain to the most recent monthGs o#erations during which ()777units of #roduct /47A were made:

Actual direct laborhours worked.... ()277Actual direct labor wages #aid........ *0),7

Re+uired:

a. hat was the labor rate variance for the month< b. hat was the labor efficienc' variance for the month<c. re#are a ournal entr' to record direct labor costs during the month) including the

direct labor variances.

Ans:

a. $abor rate variance J 8A3 F AR9 L 8A3 F SR9J *0),7 L 8()277 F 1,.179 J 1)0(7 !

b. $abor efficienc' variance J SR8A3 L S3[9

J 1,.17 8()277 L ()0779 J 1),17 D

[S3 J Standard hours #er unit F Actual out#ut J 1.* F ()777 J ()077

c. Hournal entries to record the direct labor costs:

ork In rocess *0)007$abor &fficienc' >ariance 1),17

$abor Rate >ariance 1)0(7ages a'able 8or Cash9 *0),7

AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#ortingA##endi-: 17 $%: *6 2 $evel: /edium





104. The standards for #roduct 341C s#ecif' 0. direct laborhours #er unit at 1(.57 #erdirect laborhour. $ast month 1)(,7 units of #roduct 341C were #roduced using 4)(77

direct laborhours at a total direct labor wage cost of 177)7,7.

Re+uired:

a. hat was the labor rate variance for the month< b. hat was the labor efficienc' variance for the month<c. re#are a ournal entr' to record direct labor costs during the month) including the

direct labor variances.

Ans:

a. $abor rate variance J 8A3 F AR9 L 8A3 F SR9J 177)7,7 L 84)(77 F 1(.579 J )2,7 !

b. $abor efficienc' variance J SR8A3 L S3[9J 1(.57 84)(77 L 4)7079 J 1)470 D

[S3 J Standard hours #er unit F Actual out#ut J 0. F 1)(,7 J 4)707

c. Hournal entries to record the direct labor costs:

ork In rocess 17*)52,$abor &fficienc' >ariance 1)470$abor Rate >ariance )2,7ages a'able 8or Cash9 177)7,7

AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#ortingA##endi-: 17 $%: *6 2 $evel: /edium





105. inberr' Cor#oration has #rovided the following data concerning its direct labor costsfor A#ril:

Standard wage rate............. 11.(7 #er =$3Standard hours................... (.7 =$3s #er unitActual wage rate................ 1(.77 #er =$3Actual hours....................... 4),27 =$3sActual out#ut...................... ,)*77 units

Re+uired:

re#are the ournal entr' to record the incurrence of direct labor costs.

Ans:

Standard +uantit' allowed for the actual out#ut 8,)*77 units at (.7 =$3s #er unit9 J4)077=$3s

ork In rocess 84)077 =$3s at 11.(7 #er ounce9 50)*(7$abor Rate >ariance 84),27 =$3s at 7.47 #er =$3 D9 0)220

$abor &fficienc' >ariance 81*7 =$3s D at 11.(7 #er =$3 D9 1),0

ages a'able 84),27 =$3s at 1(.77 #er =$39 171)0,7


A##endi-: 17 $%: *6 2 $evel: &as'





127. The direct labor standards at ointde-ter Cor#oration are 1(.,7 #er direct laborhour8=$39 and (.* =$3s #er unit of out#ut. In August) 2)177 units were #roduced) the

actual wage rate was 1*.77 #er =$3) and the actual hours were 1)07 =$3s.

Re+uired:

re#are the ournal entr' to record the incurrence of direct labor costs.

Ans:

Standard +uantit' allowed for the actual out#ut 82)177 units at (.* =$3s #er unit9 J10)**7=$3s

ork In rocess 810)**7 =$3s at 1(.,7 #er ounce9 (7(),5(

$abor Rate >ariance 81)07 =$3s at 7.07 #er =$3D9 5)**0

$abor &fficienc' >ariance 8227 =$3s ! at 1(.,7 #er =$3 !9 5),4

ages a'able 81)07 =$3s at 1*.77 #er =$39 (7()(47

AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#ortingA##endi-: 17 $%: *6 2 $evel: &as'






Standard labor hours #er unit of out#ut................. ,.7 hoursStandard labor rate................................................. 14.* #er hour


Actual hours worked.......... 5)*77 hoursActual total labor cost........ 121)4Actual out#ut...................... ()*77 units

Re+uired:

a. hat is the labor rate variance for the month< b. hat is the labor efficienc' variance for the month<

Ans:

$abor rate variance J 8A3 F AR9 L 8A3 F SR9J 121)4 \ 85)*77 F 14.*9J 5*7 D

S3 J Standard hours #er unit F Actual out#ut J ,.7 F ()*77 J 5)(77

$abor efficienc' variance J SR8A3 L S39

J 14.*85)*77 \ 5)(779 J 1)4* D

AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting$%: * $evel: &as'





12(. The following direct labor standards have been established for #roduct %0,$:

Standard direct laborhours............ 2.( hours #er unit of %0,$Standard direct labor wage rate...... 1(.47 #er hour

The following data #ertain to last monthGs o#erations:

Actual out#ut of #roduct %0,$............ 577 unitsActual direct laborhours worked........ 0)077Actual direct labor wages #aid............. 24),7

Re+uired:

a. hat was the labor rate variance for the month< b. hat was the labor efficienc' variance for the month<

Ans:

$abor rate variance J 8A3 F AR9 L 8A3 F SR9J 24),7 L 80)077 F 1(.479 J )5,7 !

$abor efficienc' variance J SR8A3 L S3[9J 1(.47 80)077 L 0),479 J 1)*0 D

[S3 J Standard hours #er unit F Actual out#ut J 2.( F 577 J 0),47






12*. The standards for #roduct 24> s#ecif' ,.1 direct laborhours #er unit at 1(.17 #erdirect laborhour. $ast month 1)077 units of #roduct 24> were #roduced using 0)077

direct laborhours at a total direct labor wage cost of 22)((7.

Re+uired:

a. hat was the labor rate variance for the month< b. hat was the labor efficienc' variance for the month<

Ans:

a. $abor rate variance J 8A3 F AR9 L 8A3 F SR9J 22)((7 L 80)077 F 1(.179 J ()0,7 !

b. $abor efficienc' variance J SR8A3 L S3[9J 1(.17 80)077 L 0)079 J ,4, D

[S3 J Standard hours #er unit F Actual out#ut J ,.1 F 1)077 J 0)07






12,. The following standards for variable manufacturing overhead have been establishedfor a com#an' that makes onl' one #roduct:

Standard hours #er unit of out#ut............... 0.( hoursStandard variable overhead rate................. 1*.( #er hour


Actual hours............................................... 4)(77 hoursActual total variable overhead cost............ 175),27Actual out#ut.............................................. 1)*77 units

Re+uired:

a. hat is the variable overhead s#ending variance for the month< b. hat is the variable overhead efficienc' variance for the month<

Ans:

>ariable overhead s#ending variance J 8A3 F AR9 L 8A3 F SR9J 175),27 \ 84)(77 F 1*.(9 J 4(7 D

S3 J Standard hours #er unit F Actual out#ut J 0.( F 1)*77 J 4)707

>ariable overhead efficienc' variance J SR8A3 L S39J 1*.(84)(77 \ 4)7079 J 1)4 D

AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting$%: , $evel: &as'





12. !re'tag Cor#orationEs variable manufacturing overhead is a##lied on the basis ofdirect laborhours. The com#an' has established the following variable manufacturing

overhead standards for #roduct "70C:

• Standard direct laborhours: . hours #er unit of "70C

• Standard variable manufacturing overhead rate: ,.17 #er hour

The following data #ertain to the most recent monthEs o#erations during which 1)077units of #roduct "70C were made:

Actual direct laborhours worked: 4)277Actual variable manufacturing overhead incurred: *0),7

Re+uired:

a. hat was the variable overhead s#ending variance for the month< b. hat was the variable overhead efficienc' variance for the month<

Ans:

>ariable overhead s#ending variance J 8A3 F AR9 L 8A3 F SR9J *0),7 L 84)277 F ,.179 J 427 D

>ariable overhead efficienc' variance J SR8A3 L S3[9

J ,.1784)277 L 4)4779 J ,17 !

[S3 J Standard hours #er unit F Actual out#ut J . F 1)077 J 4)477






120. 3ighfill Cor#orationEs variable manufacturing overhead is a##lied on the basis ofdirect laborhours. The standard cost card for #roduct =47= s#ecifies 4., direct laborhours #er unit of =47=. The standard variable manufacturing overhead rate is .07

#er direct laborhour. =uring the most recent month) 477 units of #roduct =47= weremade and 0)477 direct laborhours were worked.The actual variable manufacturing overhead incurred was ,1)1,7.

Re+uired:

a. hat was the variable overhead s#ending variance for the month< b. hat was the variable overhead efficienc' variance for the month<

Ans:

a. >ariable overhead s#ending variance J 8A3 F AR9 L 8A3 F SR9J ,1)1,7 L 80)477 F .079 J *)707 D

b. >ariable overhead efficienc' variance J SR8A3 L S3[9J .0780)477 L 0)2(79 J ,,4 D

[S3 J Standard hours #er unit F Actual out#ut J 4., F 477 J 0)2(7


122. h' are man' com#anies su##lementing) or even re#lacing) standard cost s'stemswith o#erating #erformance measures<

Ans:

There are a number of reasons wh' com#anies are su##lementing) or even re#lacing)their standard cost s'stems with o#erating #erformance measures. These reasonsinclude:$abor is less significant in man' com#anies and tends to be fi-ed. Thus) the traditional

labor variances are of little value.hen labor is essentiall' fi-ed) a focus on labor efficienc' variances ma' #rom#t

#roduction of needless inventories.reoccu#ation with standard costs ma' result in low +ualit' and #oor deliver' #erformance.

/an' managers would argue that continual im#rovement is necessar') not ustmeeting standards.

AACSB: Anal'tic AICA BB: Critical Thinking6 Resource /anagementAICA !": Re#orting $%: 0 $evel: /edium





124. Schlarbaum Cor#orationEs management kee#s track of the time it takes to #rocessorders. =uring the most recent month) the following average times were recorded #er

order:

=a'sait time................ *.2Ins#ection time...... . 7.(rocess time..... .. .. .. 1.*/ove time........ .. .. .. 7.4?ueue time......... .. .. 0.5

Re+uired:

a. Com#ute the through#ut time. b. Com#ute the manufacturing c'cle efficienc' 8/C&9.c. hat #ercentage of the #roduction time is s#ent in nonvalueadded activities<d. Com#ute the deliver' c'cle time.

Ans:a. Through#ut time

J rocess time P Ins#ection time P /ove time P ?ueue timeJ 1.* da's P 7.( da's P 7.4 da's P 0.5 da's J 5.( da's

b. /C& J >alueadded time 8rocess time9 K Through#ut time

J 1.* da's K 5.( da's J 7.1,

c. ercentage of time s#ent on nonvalueadded activitiesJ 177; \ /C&; J 177; \ 1,; J 40;

=eliver' c'cle time J ait time P Through#ut timeJ *.2 da's P 5.( da's J 1(.5 da's






125. =uring the most recent month at Schwab Cor#oration) +ueue time was 2.4 da's)ins#ection time was 7.* da') #rocess time was 1.* da's) wait time was 5.2 da's) and

move time was 7.2 da'.

Re+uired:

a. Com#ute the through#ut time. b. Com#ute the manufacturing c'cle efficienc' 8/C&9.c. hat #ercentage of the #roduction time is s#ent in nonvalueadded activities<d. Com#ute the deliver' c'cle time.


J rocess time P Ins#ection time P /ove time P ?ueue timeJ 1.* da's P 7.* da's P 7.2 da's P 2.4 da's J 17.1 da's

b. /C& J >alueadded time 8rocess time9 K Through#ut timeJ 1.* da's K 17.1 da's J 7.1*

c. ercentage of time s#ent on nonvalueadded activitiesJ 177; \ /C&; J 177; \ 1*; J 42;

d. =eliver' c'cle time J ait time P Through#ut timeJ 5.2 da's P 17.1 da's J 15.4 da's

AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting$%: 0 $evel: /edium





147. Schur Cor#orationEs management re#orts that its average deliver' c'cle time is (0.2da's) its average through#ut time is 17.7 da's) its manufacturing c'cle efficienc'

8/C&9 is 7.(() its average move time is 7.0 da') and its average +ueue time is 0.2da's.

Re+uired:

a. hat is the wait time< b. hat is the #rocess time<c. hat is the ins#ection time<

Ans:

a. =eliver' c'cle time J ait time P Through#ut time(0.2 da's J ait time P 17.7 da'sait time J (0.2 da's L 17.7 da's J 10.2 da's

b. /C& J rocess time K Through#ut time7.(( J rocess time K 17.7 da'srocess time J 7.(( F 17.7 da's J (.( da's

c. Through#ut timeJ rocess time P Ins#ection time P /ove time P ?ueue time17.7 da's J (.( da's P Ins#ection time P 7.0 da's P 0.2 da's

Ins#ection time J 17.7 da's L (.( da's L 7.0 da's L 0.2 da'sJ 7. da's

AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting$%: 0 $evel: 3ard





141. Alghamdi Cor#oration kee#s careful track of the time re+uired to fill orders. The timesre+uired for a #articular order a##ear below:

3oursait time................ 17.,rocess time......... .. 1.1Ins#ection time....... 7.1/ove time.............. (.,?ueue time............. 5.*

Re+uired:

a. =etermine the through#ut time. Show 'our workY

b. =etermine the manufacturing c'cle efficienc' 8/C&9. Show 'our workYc. =etermine the deliver' c'cle time. Show 'our workY


J rocess time P Ins#ection time P /ove time P ?ueue timeJ 1.1 hours P 7.1 hours P (., hours P 5.* hoursJ 1(.5 hours

b. /C& J >alueadded timeVThrough#ut timeJ 1.1 hoursV1(.5 hours J 7.75

c. =eliver' c'cle time J ait time P Through#ut timeJ 17., hours P 1(.5 hours J (*.* hours


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