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accounting problems




Question;Problem 1;Your Company, Inc. manufactures widgets. The company has not been meeting its;projected net operating income. The contribution income statement for the month;of April is shown below;Budgeted Actual;Sales (20,000) $600,000 $600,000;Variable expenses;Variable;cost of goods sold1 240,000 261,122;Variable;selling expense 27,000 27,000;Total variable expenses 267,000 288,122;Contribution margin 333,000 311,878;Fixed expenses;Manufacturing;overhead 175,000 175,000;Selling;administrative 112,000 112,000;Total fixed expense 287,000 287,000;Net operating income $ 46,000 $ 24,878;Based upon a review of the income statement, upper management has determined;the major problem lies with variable cost of goods sold. The standard cost per;widget is;Standard;Quantity Standard Price Standard;or hours or rate cost;Direct Materials 3.0 pounds $2.00/lb. $6.00;Direct Labor 0.8 hour $6.00/hr. 4.80;Variable Manufacturing Overhead 0.4 hour2 $3.00/hr. 1.20;Total Standard Cost $12.001Contains direct material, direct labor, and variable manufacturing;overhead.2Based on machine hours.Given: During the month of April;a] 20,000 units were produced.;b] 65,000 pounds of material was;purchased at a cost of $1.90 per pound.;c] 65,000 pounds of material was;used?there were no beginning or ending inventories.;d] 15,730 direct labor hours were;worked at a cost of $7.20 per hour.;e] $24,366 of variable manufacturing;costs was incurred. A total of 7,860 machine hours was recorded. It is the;policy to close all variances to cost of goods sold on a monthly basis.;Required;1] Compute the following for the month;of April;a);Direct materials price and quantity variances;b);Direct labor rate and efficiency variances, and;c);Variable overhead rate and efficiency variances.;2] Summarize the variances that you;computed by showing the net favorable or unfavorable variance for the month.;What impact did this figure have on the company?s income statement? Please show;your computations.;3] Pick out the two most significant;variances that you computed.;Problem 2;My Company, Inc. produces table cloths. The company has a standard cost system;in use for its table cloths. The plant should work 3,000 hours to produce 2,000;type ?A? table cloths. The standard costs for type ?A? table cloths are;Total Per table cloth;Direct;materials $89,600 $44.80;Direct;labor $18,000;9.00;Variable;manufacturing overhead;(based on direct labor hours) $ 7,500 3.75;Total $57.55;During the month of April, the plant worked only 2,850 direct labor hours and;produced 2,200 type ?A? table cloths. The following actual costs were recorded;in April;Total Per table cloth;Direct;materials (12,010 yards) $95,480 $43.40;Direct;labor $18,525;8.42;Variable;manufacturing overhead $ 7,700;3.50;At standard, each table cloth should require 5.6 yards of material. All of the;materials purchased during the month were used in production.;Required;Compute the following for the month of April (ignore rounding errors);1] The direct materials price and;quantity variances;2] The direct labor rate and;efficiency variances, and;3] The variable overhead rate and;efficiency variances.


Paper#38640 | Written in 18-Jul-2015

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