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Accounting 23rd Edition Carl S. Warren - Solutions
=+EX 23-4 Direct materials variances obj. 3✔a. Price variance,$2,730 F I-Time, Inc., produces electronic timepieces. The company uses mini-LCD displays for its products. Each timepiece uses one display. The company produced 550 timepieces during March. However, due to LCD defects, the company
=+EX 23-5 Direct materials variances obj. 3✔ Quantity variance,$184 U Determine the price variance, quantity variance, and total direct materials cost variance for March.The following data relating to direct materials cost for March of the current year are taken from the records of Play Tyme
=+Determine the standard direct materials cost per unit of finished product, assuming that there was no inventory of work in process at either the beginning or the end of the month.
=+EX 23-6 Standard direct materials cost per unit from variance data objs. 2, 3 H.J. Heinz Company uses standards to control its materials costs. Assume that a batch of ketchup (1,500 pounds) has the following standards:Standard Quantity Standard Price Whole tomatoes 2,500 lbs. $ 0.45 per
=+The actual materials in a batch may vary from the standard due to tomato characteristics. Assume that the actual quantities of materials for batch K103 were as follows:2,600 lbs. of tomatoes 135 gal. of vinegar 13 gal. of corn syrup 55 lbs. of salta. Determine the standard unit materials cost
=+b. Determine the direct materials quantity variance for batch K103.
=+EX 23-7 Standard product cost, direct materials variance objs. 2, 3 The following data relate to labor cost for production of 5,500 cellular telephones:Actual: 3,650 hrs. at $15.20 $55,480 Standard: 3,710 hrs. at $15.00 $55,650a. Determine the rate variance, time variance, and total direct labor
=+b. Discuss what might have caused these variances.
=+EX 23-8 Direct labor variances obj. 3✔a. Rate variance,$730 U Alpine Bicycle Company manufactures mountain bikes. The following data for May of the current year are available:Quantity of direct labor used 600 hrs.Actual rate for direct labor $12.50 per hr.Bicycles completed in May 280 Standard
=+b. How much direct labor should be debited to Work in Process?
=+EX 23-9 Direct labor variances objs. 3, 5✔a. Time variance,$510 U The Freedom Clothes Company produced 18,000 units during June of the current year.The Cutting Department used 3,500 direct labor hours at an actual rate of $12.10 per hour. The Sewing Department used 5,800 direct labor hours at
=+EX 23-10 Direct labor variances obj. 3✔a. Cutting Department rate variance, $350 unfavorable Chapter 23 Performance Evaluation Using Variances from Standard Costs 1073a. Determine the direct labor rate and time variance for the (1) Cutting Department and (2) Sewing Department.
=+b. Interpret your results.St. Luke Hospital began using standards to evaluate its Admissions Department. The standard was broken into two types of admissions as follows:Standard Time to Complete Type of Admission Admission Record Unscheduled admission 40 min.Scheduled admission 10 min.The
=+The Admissions Department employs two full-time people (40 productive hours per week, with no overtime) at $18 per hour. For the most recent week, the department handled 66 unscheduled and 240 scheduled admissions.a. How much was actually spent on labor for the week?
=+b. What are the standard hours for the actual volume for the week?
=+c. Calculate a time variance, and report how well the department performed for the week.
=+EX 23-11 Direct labor standards for nonmanufacturing expenses obj. 3✔a. $1,440 One of the operations in the U.S. Post Office is a mechanical mail sorting operation. In this operation, letter mail is sorted at a rate of one letter per second. The letter is mechanically sorted from a three-digit
=+Assume that the sorting operators are temporary employees. The union contract requires that temporary employees be hired for one month at a time. Each temporary employee is hired to work 150 hours in the month.a. How many temporary employees should the manager hire for December?
=+b. If each employee earns a standard $18 per hour, what would be the labor time variance if the actual number of letters sorted in December was 33,840,000?
=+EX 23-12 Direct labor standards for nonmanufacturing operations objs. 2, 3 At the beginning of October, Cornerstone Printers Company budgeted 16,000 books to be printed in October at standard direct materials and direct labor costs as follows:Direct materials $24,000 Direct labor 8,000 _______
=+The standard materials price is $0.60 per pound. The standard direct labor rate is$10 per hour. At the end of October, the actual direct materials and direct labor costs were as follows:Actual direct materials $21,600 Actual direct labor 7,200 _______ Total $28,800 _______ _______
=+There were no direct materials price or direct labor rate variances for October. In addition, assume no changes in the direct materials inventory balances in October.Cornerstone Printers Company actually produced 14,000 units during October.
=+Determine the direct materials quantity and direct labor time variances.
=+EX 23-13 Direct materials and direct labor variances objs. 2, 3✔ Direct materials quantity variance,$600 U 1074 Chapter 23 Performance Evaluation Using Variances from Standard Costs Western Wood Products Company prepared the following factory overhead cost budget for the Press Department for
=+Variable overhead cost:Indirect factory labor $27,500 Power and light 3,600 Indirect materials 23,000 _______ Total variable cost $ 54,100 Fixed overhead cost:Supervisory salaries $42,000 Depreciation of plant and equipment 40,000 Insurance and property taxes 12,000 _______ Total fixed cost
=+Assuming that the estimated costs for March are the same as for February, prepare a flexible factory overhead cost budget for the Press Department for March for 8,000, 10,000, and 12,000 hours of production.
=+EX 23-14 Flexible overhead budget obj. 4✔ Total factory overhead, 12,000 hrs.$158,920 Colliers Company has determined that the variable overhead rate is $2.90 per direct labor hour in the Fabrication Department. The normal production capacity for the Fabrication Department is 14,000 hours for
=+b. How much overhead would be applied to production if 15,000 hours were used in the department during the month?
=+EX 23-15 Flexible overhead budget obj. 4 The following data relate to factory overhead cost for the production of 5,000 computers:Actual: Variable factory overhead $125,000 Fixed factory overhead 34,000 Standard: 5,000 hrs. at $30 150,000
=+If productive capacity of 100% was 8,000 hours and the factory overhead cost budgeted at the level of 5,000 standard hours was $162,750, determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance. The fixed
=+EX 23-16 Factory overhead cost variances obj. 4✔ Volume variance,$12,750 U Perma Weave Textiles Corporation began January with a budget for 30,000 hours of production in the Weaving Department. The department has a full capacity of 40,000 hours under normal business conditions. The budgeted
=+The actual factory overhead was $128,500 for January. The actual fixed factory overhead was as budgeted. During January, the Weaving Department had standard hours at actual production volume of 31,000 hours.a. Determine the variable factory overhead controllable variance.
=+b. Determine the fixed factory overhead volume variance.
=+EX 23-17 Factory overhead cost variances obj. 4✔a. $1,000 F The data related to Acclaim Sporting Goods Company’s factory overhead cost for the production of 50,000 units of product are as follows:Actual: Variable factory overhead $269,000 Fixed factory overhead 180,000 Standard: 76,000 hrs.
=+EX 23-18 Factory overhead variance corrections obj. 4 Chapter 23 Performance Evaluation Using Variances from Standard Costs 1075 Productive capacity at 100% of normal was 75,000 hours, and the factory overhead cost budgeted at the level of 76,000 standard hours was $456,000. Based on these data,
=+Fixed factory overhead volume variance:Normal productive capacity at 100% 75,000 hrs.Standard for amount produced 76,000 ________ Productive capacity not used 1,000 hrs.Standard variable factory overhead rate ________ $6.00
=+Variance—unfavorable 6,000 ______ Total factory overhead cost variance—unfavorable $1,400 ______ ______ Identify the errors in the factory overhead cost variance analysis.Scientific Molded Products Inc. prepared the following factory overhead cost budget for the Trim Department for August
=+Scientific Molded Products has available 15,000 hours of monthly productive capacity in the Trim Department under normal business conditions. During August, the Trim Department actually used 11,000 hours for production. The actual fixed costs were as budgeted. The actual variable overhead for
=+EX 23-19 Factory overhead cost variance report obj. 4✔ Net controllable variance, $500 U Orion Manufacturing Company incorporates standards in its accounts and identifies variances at the time the manufacturing costs are incurred. Journalize the entries to record the following transactions:
=+a. Purchased 1,700 units of copper tubing on account at $54.50 per unit. The standard price is $56.00 per unit.
=+b. Used 1,000 units of copper tubing in the process of manufacturing 120 air conditioners.Eight units of copper tubing are required, at standard, to produce one air conditioner.
=+EX 23-20 Recording standards in accounts obj. 5 The Assembly Department produced 2,000 units of product during June. Each unit required 1.5 standard direct labor hours. There were 3,200 actual hours used in the Assembly Department during June at an actual rate of $14.00 per hour. The standard
=+EX 23-21 Recording standards in accounts obj. 5 1076 Chapter 23 Performance Evaluation Using Variances from Standard Costs The following data were taken from the records of Parrott Company for December 2010:Administrative expenses $ 72,000 Cost of goods sold (at standard) 345,000 Direct materials
=+Variable factory overhead controllable variance—favorable 250 Fixed factory overhead volume variance—unfavorable 3,200 Interest expense 2,250 Sales 580,000 Selling expenses 85,800 Prepare an income statement for presentation to management.
=+EX 23-22 Income statement indicating standard cost variances obj. 5✔ Income before income tax, $74,050 Under Par, Inc., is an Internet retailer of golf equipment. Customers order golf equipment from the company, using an online catalog. The company processes these orders and delivers the
=+Average computer response time to customer “clicks”Dollar amount of returned goods Elapsed time between customer order and product delivery Maintenance dollars divided by hardware investment Number of customer complaints divided by the number of orders Number of misfilled orders divided by
=+b. Provide an explanation for each performance measure.
=+EX 23-23 Nonfinancial performance measures obj. 6 Tri-County College wishes to monitor the efficiency and quality of its course registration process.a. Identify three input and three output measures for this process.
=+b. Why would Tri-County College use nonfinancial measures for monitoring this process?
=+EX 23-24 Nonfinancial performance measures obj. 6 Problems Series A Best Bathware Company manufactures faucets in a small manufacturing facility. The faucets are made from zinc. Manufacturing has 50 employees. Each employee presently provides 36 hours of labor per week. Information about a
=+Standard wage per hr. $14.60 Standard labor time per faucet 15 min.Standard number of lbs. of zinc 1.6 lbs.Standard price per lb. of zinc $11.50 Actual price per lb. of zinc $11.75 Actual lbs. of zinc used during the week 12,400 lbs.Number of faucets produced during the week 7,500 Actual wage per
=+PR 23-1A Direct materials and direct labor variance analysis objs. 2, 3✔c. Direct labor time variance,$1,095 F Determine (a) the standard cost per unit for direct materials and direct labor; (b) the price variance, quantity variance, and total direct materials cost variance; and (c) the rate
=+Scandia Coat Company makes women’s and men’s coats. Both products require filler and lining material. The following planning information has been made available:Standard Quantity Women’s Coats Men’s Coats Standard Price per Unit Filler 2.5 lbs. 4.0 lbs. $1.25 Liner 6.0 yds. 8.5 yds. 6.50
=+Scandia Coat does not expect there to be any beginning or ending inventories of filler and lining material. At the end of the budget year, Scandia Coat experienced the following actual results:Women’s Coats Men’s Coats Actual production 4,300 5,500 Actual Price per Unit Actual Quantity
=+The expected beginning inventory and desired ending inventory were realized.Instructions 1. Prepare the following variance analyses, based on the actual results and production levels at the end of the budget year:
=+a. Direct materials price, quantity, and total variance.
=+b. Direct labor rate, time, and total variance.
=+2. Why are the standard amounts in part (1) based on the actual production at the end of the year instead of the planned production at the beginning of the year?
=+PR 23-2A Flexible budgeting and variance analysis objs. 2, 3✔ 1.a. Direct materials price variance,$18,420 U Road Ready Tire Co. manufactures automobile tires. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 5,200 tires
=+Direct materials 71,000 lbs. at $5.10 70,600 lbs. at $5.00 Direct labor 1,300 hrs. at $17.50 1,330 hrs. at $17.80 Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 1,350 direct labor hrs.:
=+Variable cost, $3.10 $4,000 variable cost Fixed cost, $4.90 $6,615 fixed cost Each tire requires 0.25 hour of direct labor.Instructions
=+Determine (a) the price variance, quantity variance, and total direct materials cost variance; (b) the rate variance, time variance, and total direct labor cost variance; and(c) variable factory overhead controllable variance, the fixed factory overhead volume variance, and total factory overhead
=+PR 23-3A Direct materials, direct labor, and factory overhead cost variance analysis objs. 3, 4✔a. Direct materials price variance,$7,060 F 1078 Chapter 23 Performance Evaluation Using Variances from Standard Costs Bio-Care, Inc., a manufacturer of disposable medical supplies, prepared the
=+Indirect factory wages $135,000 Power and light 93,600 Indirect materials 25,200 ________ Total variable cost $253,800 Fixed costs:Supervisory salaries $ 72,000 Depreciation of plant and equipment 51,500 Insurance and property taxes 24,100 ________ Total fixed cost 147,600 ________ Total factory
=+During March, the department operated at 16,900 hours, and the factory overhead costs incurred were indirect factory wages, $126,320; power and light, $88,110; indirect materials, $23,220; supervisory salaries, $72,000; depreciation of plant and equipment,$51,500; and insurance and property
=+PR 23-4A Standard factory overhead variance report obj. 4✔ Controllable variance, $640 F The Radiology Department provides imaging services for Parkside Medical Center.One important activity in the Radiology Department is transcribing digitally recorded analyses of images into a written report.
=+2. What was the labor time variance as a result of typing 72,000 lines?
=+3. What was the labor rate variance as a result of the bonus?
=+4. The manager is trying to determine if a better decision would have been to hire a temporary transcriptionist to meet the higher typing demands in the first week of May, rather than paying out the bonus. If another employee was hired from the employment firm, what would have been the labor time
=+5. Which decision is better, paying the bonus or hiring another transcriptionist?
=+6. Are there any performance-related issues that the labor time and rate variances fail to consider? Explain.
=+PR 23-5A Standards for nonmanufacturing expenses objs. 3, 6✔ 2. $256 F Problems Series B Vintage Dresses Inc. manufactures dresses in a small manufacturing facility.Manufacturing has 20 employees. Each employee presently provides 35 hours of productive labor per week. Information about a
=+PR 23-1B Direct materials and direct labor variance analysis Chapter 23 Performance Evaluation Using Variances from Standard Costs 1079 Standard wage per hr. $10.80 Standard labor time per dress 12 min.Standard number of yds. of fabric per dress 3.8 yds.Standard price per yd. of fabric $2.90
=+Determine (a) the standard cost per dress for direct materials and direct labor; (b) the price variance, quantity variance, and total direct materials cost variance; and (c) the rate variance, time variance, and total direct labor cost variance.
=+objs. 2, 3✔c. Rate variance,$140 U Cocoa Delights Chocolate Company makes dark chocolate and light chocolate. Both products require cocoa and sugar. The following planning information has been made available:Standard Quantity Dark Chocolate Light Chocolate Standard Price per Pound Cocoa 12 lbs.
=+Cocoa Delights Chocolate does not expect there to be any beginning or ending inventories of cocoa or sugar. At the end of the budget year, Cocoa Delights Chocolate had the following actual results:Dark Chocolate Light Chocolate Actual production (cases) 2,800 5,500 Actual Price per Pound Actual
=+a. Direct materials price, quantity, and total variance.
=+b. Direct labor rate, time, and total variance.
=+2. Why are the standard amounts in part (1) based on the actual production for the year instead of the planned production for the year?
=+PR 23-2B Flexible budgeting and variance analysis objs. 2, 3✔ 1.a. Direct materials quantity variance, $2,630 F Eastern Polymers, Inc., processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture
=+Variable cost, $2.20 $5,020 variable cost Fixed cost, $3.50 $7,000 fixed cost Each unit requires 0.1 hour of direct labor.PR 23-3B Direct materials, direct labor, and factory overhead cost variance analysis objs. 3, 4✔c. Controllable variance, $150 F Determine (a) the price variance, quantity
=+KAT Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for December 2010. The company expected to operate the department at 100% of normal capacity of 5,600 hours.Variable costs:Indirect factory wages $17,640
=+PR 23-4B Standard factory overhead variance report obj. 4✔ Controllable variance, $130 U Office Pro, Inc., does software development. One important activity in software development is writing software code. The manager of the WordPro Development Team determined that the average software
=+a minimum of a 40-hour week. Programmers are paid $28.00 per hour. The manager offered a bonus if the team could generate more than 6,500 lines for the week, without overtime. Due to a project emergency, the programmers wrote more code in the first week of May than planned. The actual amount of
=+1. If the team generated 6,000 lines of code according to the original plan, what would have been the labor time variance?
=+2. What was the actual labor time variance as a result of generating 7,000 lines of code?
=+3. What was the labor rate variance as a result of the bonus?
=+4. The manager is trying to determine if a better decision would have been to hire a temporary programmer to meet the higher programming demand in the first week of May, rather than paying out the bonus. If another employee was hired from the employment firm, what would have been the labor time
=+5. Which decision is better, paying the bonus or hiring another programmer?
=+6. Are there any performance-related issues that the labor time and rate variances fail to consider? Explain.
=+PR 23-5B Standards for nonmanufacturing expenses objs. 3, 6✔ 3. $960 U Chapter 23 Performance Evaluation Using Variances from Standard Costs 1081 Essence of Persia, Inc., began operations on January 1, 2010. The company produces a hand and body lotion in an eight-ounce bottle called Eternal
=+DIRECT MATERIALS Cost Units Cost Direct Materials Behavior per Case per Unit Cost per Case Cream base Variable 72 ozs. $0.015 $ 1.08 Natural oils Variable 24 ozs. 0.250 6.00 Bottle (8-oz.) Variable 12 bottles 0.400 4.80 ______ ______$11.88 ______
=+DIRECT LABOR Cost Time Labor Rate Direct Labor Cost Department Behavior per Case per Hour per Case Mixing Variable 16.80 min. $15.00 $4.20 Filling Variable 4.20 12.00 0.84 _____ _____ _____ _____
=+21.00 min. $5.04 _____ _____ FACTORY OVERHEAD Cost Behavior Total Cost Utilities Mixed $ 230 Facility lease Fixed 14,392 Equipment depreciation Fixed 3,600 Supplies Fixed 600 _______ _______$18,822 _______ Part A—Break-Even Analysis
=+The management of Essence of Persia, Inc., wishes to determine the number of cases required to break even per month. The utilities cost, which is part of factory overhead, is a mixed cost. The following information was gathered from the first six months of operation regarding this cost:2010 Case
=+1. Determine the fixed and variable portion of the utility cost using the high-low method.
=+2. Determine the contribution margin per case.
=+3. Determine the fixed costs per month, including the utility fixed cost from part (1).
=+4. Determine the break-even number of cases per month.Part B—August Budgets
=+During July of the current year, the management of Essence of Persia, Inc., asked the controller to prepare August manufacturing and income statement budgets. Demand was expected to be 1,400 cases at $80 per case for August. Inventory planning information is provided as follows:Finished Goods
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