Question;Ex. 211;Platt Company produces one product, a putter;called PAR-putter. Platt uses a standard cost system and determines that it;should take one hour of direct labor to produce one PAR-putter. The normal;production capacity for this putter is 100,000 units per year. The total;budgeted overhead at normal capacity is $500,000 comprised of $200,000 of;variable costs and $300,000 of fixed costs. Platt applies overhead on the basis;of direct labor hours.;During the current year, Platt produced 85,000;putters, worked 89,000 direct labor hours, and incurred variable overhead costs;of $160,000 and fixed overhead costs of $300,000.;Instructions;(a) Compute the predetermined variable overhead;rate and the predetermined fixed overhead rate.;(b) Compute the applied overhead for Platt for;the year.;(c) Compute the total overhead variance.;Ex. 212;Hector;Company has developed the following standard costs for its product for 2012;HECTOR COMPANY;Standard Cost Card;Product A;Cost Element Standard;Quantity ? Standard Price = Standard Cost;Direct materials 4 pounds $3 $12;Direct labor 3 hours 8 24;Manufacturing overhead 3 hours 4 12;$48;The company;expected to produce 30,000 units of Product A in 2013 and work 90,000 direct;labor hours.;Actual;results for 2013 are as follows;?;31,000;units of Product A were produced.;?;Actual;direct labor costs were $746,200 for 91,000 direct labor hours worked.;?;Actual;direct materials purchased and used during the year cost $346,500 for 126,000;pounds.;?;Actual;variable overhead incurred was $155,000 and actual fixed overhead incurred was;$205,000.;Instructions;Compute the following variances showing all;computations to support your answers. Indicate whether the variances are;favorable or unfavorable.;(a) Materials quantity variance.;(b) Total direct labor variance.;(c) Direct labor quantity;variance.;(d) Direct materials price;variance.;(e) Total overhead variance.;Ex. 213;Dart Company;developed the following standard costs for its product for 2013;DART COMPANY;Standard Cost Card;Cost Elements Standard;Quantity ? Standard Price = Standard;Cost;Direct materials 4 pounds $ 5 $20;Direct labor 2 hours 10 20;Variable overhead 2 hours 4 8;Fixed overhead 2 hours 2 4;$52;The company expected to work at the 120,000 direct;labor hours level of activity and produce 60,000 units of product.;Actual;results for 2013 were as follows;?;56,800;units of product were actually produced.;?;Direct;labor costs were $1,092,000 for 112,000 direct labor hours actually worked.;?;Actual;direct materials purchased and used during the year cost $1,108,800 for 231,000;pounds.;?;Total;actual manufacturing overhead costs were $680,000.;Ex. 213 (cont.);Instructions;Compute the following variances for Dart Company;for 2013 and indicate whether the variance is favorable or unfavorable.;1. Direct;materials price variance.;2. Direct;materials quantity variance.;3. Direct;labor price variance.;4. Direct;labor quantity variance.;a5. Overhead;controllable variance.;a6. Overhead;volume variance.;Ans: N/A, LO: 4,5,10, Bloom: AN, Difficulty;Medium, Min: 20, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA;FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Management;Ex. 214;Flagstaff, Inc.;uses standard costing for its one product, baseball bats. The standards call;for 3 board-feet of wood at $1.40 per board-foot, and 45 minutes of work at $12;per hour per bat. Total manufacturing overhead costs were estimated at $9,450;of which the variable portion was $0.50 per bat and the fixed portion was $1.00;per bat with an estimate of 6,300 bats to be produced. Flagstaff identifies;price variances at the earliest possible point in time.;During March, the company had the following;results;Direct labor used;= 4,800 hours at a cost of $56,400;Actual;manufacturing overhead fixed costs = $6,000;Actual;manufacturing overhead variable costs = $3,100;Bats produced = 6,000;Instructions;Compute the following variances for March.;1. Labor quantity variance;2. Total labor variance;a3. Overhead controllable variance;a4. Overhead volume variance;Ex. 215;Prescott;Manufacturing manufactures widgets for distribution. The standard costs for the;manufacture of widgets follow;Standard;Costs Actual;Costs;Direct;materials 3 lbs. per widget;at 31,000 lbs. at;$34;$35;per pound per;pound;Direct;labor 2.5 hours per;widget 22,500 hours;at;at;$11 per hour $11.80;per hour;Factory;overhead Variable cost, $24/widget $241,500 variable cost;Fixed;cost, $40/widget $381,250;fixed cost;Ex. 215 (Cont.);Budgeted factory;overhead was $640,000. Overhead applied is based on widgets produced. The;company estimated that 10,000 widgets would be produced, however, only 9,600 were;produced.;Instructions;Calculate the following amounts.;1. Rate;at which total factory overhead is applied;2. Materials;price variance;3. Total;materials variance;a4. Overhead volume variance;a5. Overhead controllable variance;Ex. 216;More Hits Company manufactures aluminum baseball;bats that it sells to university athletic departments. It has developed the;following per unit standard costs for 2013 for each baseball bat;Manufacturing;Direct Materials Direct;Labor Overhead;Standard Quantity 2;Pounds (Aluminum) 1/2 hour 1/2 hour;Standard Price $4.00 $10.00 $6.00;Unit Standard Cost $8.00 $5.00 $3.00;In 2013, the company planned to produce 120,000;baseball bats at a level of 60,000 hours of direct labor.;Ex. 216 (Cont.);Actual;results for 2013 are presented below;1. Direct materials purchases;were 246,000 pounds of aluminum which cost $1,020,900.;2. Direct materials used were 220,000;pounds of aluminum.;3. Direct labor costs were $575,260;for 58,700 direct labor hours actually worked.;4. Total manufacturing overhead;was $352,000.;5. Actual production was 114,000;baseball bats.;Instructions;(a) Compute;the following variances;1. Direct;materials price.;2. Direct;materials quantity.;3. Direct;labor price.;4. Direct;labor quantity.;5. Total;overhead variance.;a(b) Prepare;the journal entries to record the transactions and events in 2013.;Ex. 217;The standard cost of Product 245 manufactured by Albert;Industries includes 2 pounds of direct materials at $4.00 per pound. During;September, 40,000 pounds of direct materials are purchased at a cost of $3.85;per pound, and all of the direct materials are used to produce 19,000 units of;Product 245.;Instructions;(a) Compute the materials price and quantity;variances.;a(b) Journalize;the purchase of the materials and the issuance of the materials, assuming a;standard cost system is used.;Ex. 218;Aztec, Inc.'s standard labor cost of producing;one unit of product is 2 hours at the rate of $14.00 per hour. During February;52,000 hours of labor are incurred at a cost of $13.80 per hour to produce 25,000;units of product.;Instructions;(a) Compute the labor price and labor quantity;variances.;a(b) Journalize;the incurrence of the labor costs and the assignment of direct labor to;production, assuming a standard cost system is used.;Ex. 219;The following direct labor data pertain to the;operations of Murray Industries for the month of November;Standard;labor rate $15.00;per hr.;Actual;hours incurred 9,000;The standard cost card shows that 2.5;hours are required to complete one unit of product. The actual labor rate;incurred exceeded the standard rate by 10%. Four thousand units were manufactured;in November.;Ex. 219 (Cont.);Instructions;(a) Calculate the price, quantity;and total labor variances.;a(b) Journalize the entries to record;the labor variances.;aEx. 220;North Coast;Manufacturing provided the following information about its standard costing;system for 2013;Standard Data Actual;Data;Labor 2;hrs. @ $21 per hr. Produced 9,000 units;Budgeted fixed overhead $100,000 Labor;worked 17,000 hrs. costing $340,000;Budgeted variable overhead $30 per unit Actual;overhead $375,000;Budgeted production 10,000;units;North Coast applies fixed overhead at $10 per unit;produced.;Instructions;Determine the amounts of the overhead variances.
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