MISSOURI CORP. manufactures widgets. The materials used for the widgets are inexpensive, but the process is...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
MISSOURI CORP. manufactures widgets. The materials used for the widgets are inexpensive, but the process is very labor intensive. The supervisor decided to use cheaper labor this period to see whether costs could be reduced. You have been asked to prepare a report about how effective operations had been during the month of October. The following standards have been established in connection with the production of one widget (standard costs per unit): Cost per unit Direct materials Direct labor 3 lbs. @ $12 per lb. $36 5 hrs @ $15 per hr $75 Factory overhead: Variable Fixed $3 per direct labor hr $15 $4 per direct labor hr ($20 per unit)) $20 $146 Overhead (fixed and variable) is applied on the basis of direct labor hours. Estimated production for the month was 8,000 widgets, or 40,000 labor hours. During October, the company actually produced 7,800 widgets and the records showed the following: Direct materials purchased Direct materials used Direct labor Variable overhead Fixed overhead 23,100 lbs @ 23,100 lbs @ $12.60 40,100 hours @ $14.60 $119,000 $180,000 Note: The quantity purchased was exactly equal to the quantity used. The company's policy is to record direct materials price variances at the time the materials are purchased. REQUIRED: DIRECT MATERIALS 1. Assume the company uses normal costing. Record the journal entries for direct materials (T-accounts preferred): a) Record the actual purchase of materials b) Record the usage of materials 2. Prepare a simple and meaningful performance report (variance report) for direct materials AND direct labor showing: (A picture would be just fine) a) The total budget variance; b) The flexible budget variance (Standard Cost Variance) c) The volume variance 3. NOW ASSUME that the company has chosen to use a standard costing system to record all inventory at standard, show the entries needed (written AND T-accounts) as follows: a) Record the actual purchase of materials on account and the price variance. b) Record the usage of materials during the period and the usage variance. c) Dispose of the price and usage variances. 4. Interpret each of the direct materials variances. Give at least 2 possible causes for each, and indicate what person (s) would be primarily responsible. 5. Prepare a simple and meaningful performance report (variance report) for direct materials which explains the flexible budget variance (standard cost variance) above. (A picture would be just fine) 6. For this requirement only - how would your variances and entries be different if, instead of purchasing 23,100 lbs per above, the company purchased 30,000 lbs, but only used 23,100 per above. Re-compute any variances and journal entries from #3 using this assumption. DIRECT LABOR 7. Assume the company uses normal costing. Record the journal entries for direct labor (T-accounts preferred): a) Usage of direct labor b) Payment of direct labor 8. Prepare a simple and meaningful performance report (variance report) for direct materials AND direct labor showing: (A picture would be just fine) d) The total budget variance; e) The flexible budget variance (standard cost variance) f) The volume variance 9. NOW ASSUME that the company has chosen to use a standard costing system to record all inventory at standard, show the entries needed (written AND T-accounts) as follows: d) Record the usage of direct labor in production and the direct labor rate and efficiency variances. e) Record payment of direct labor. f) Dispose of the rate and efficiency variances. 10. Interpret each of the labor variances. Give at least 2 possible causes for each, and indicate what person (s) would be primarily responsible 11. Prepare a simple and meaningful performance report (variance report) for direct materials which explains the flexible budget variance (standard cost variance) above. (A picture would be just fine) For class, if time allows: (certainly, feel free to look this over, do the reading and try it for class) 12. Compute the variable overhead spending and efficiency variances. a) Journalize the actual incurring of variable overhead and variable overhead variances. b) Apply variable overhead c) Record variances and close 13. Compute the fixed overhead spending and volume variances. a) Journalize the actual incurring of fixed overhead and fixed overhead variances. b) Apply fixed overhead c) Record variances and close MISSOURI CORP. manufactures widgets. The materials used for the widgets are inexpensive, but the process is very labor intensive. The supervisor decided to use cheaper labor this period to see whether costs could be reduced. You have been asked to prepare a report about how effective operations had been during the month of October. The following standards have been established in connection with the production of one widget (standard costs per unit): Cost per unit Direct materials Direct labor 3 lbs. @ $12 per lb. $36 5 hrs @ $15 per hr $75 Factory overhead: Variable Fixed $3 per direct labor hr $15 $4 per direct labor hr ($20 per unit)) $20 $146 Overhead (fixed and variable) is applied on the basis of direct labor hours. Estimated production for the month was 8,000 widgets, or 40,000 labor hours. During October, the company actually produced 7,800 widgets and the records showed the following: Direct materials purchased Direct materials used Direct labor Variable overhead Fixed overhead 23,100 lbs @ 23,100 lbs @ $12.60 40,100 hours @ $14.60 $119,000 $180,000 Note: The quantity purchased was exactly equal to the quantity used. The company's policy is to record direct materials price variances at the time the materials are purchased. REQUIRED: DIRECT MATERIALS 1. Assume the company uses normal costing. Record the journal entries for direct materials (T-accounts preferred): a) Record the actual purchase of materials b) Record the usage of materials 2. Prepare a simple and meaningful performance report (variance report) for direct materials AND direct labor showing: (A picture would be just fine) a) The total budget variance; b) The flexible budget variance (Standard Cost Variance) c) The volume variance 3. NOW ASSUME that the company has chosen to use a standard costing system to record all inventory at standard, show the entries needed (written AND T-accounts) as follows: a) Record the actual purchase of materials on account and the price variance. b) Record the usage of materials during the period and the usage variance. c) Dispose of the price and usage variances. 4. Interpret each of the direct materials variances. Give at least 2 possible causes for each, and indicate what person (s) would be primarily responsible. 5. Prepare a simple and meaningful performance report (variance report) for direct materials which explains the flexible budget variance (standard cost variance) above. (A picture would be just fine) 6. For this requirement only - how would your variances and entries be different if, instead of purchasing 23,100 lbs per above, the company purchased 30,000 lbs, but only used 23,100 per above. Re-compute any variances and journal entries from #3 using this assumption. DIRECT LABOR 7. Assume the company uses normal costing. Record the journal entries for direct labor (T-accounts preferred): a) Usage of direct labor b) Payment of direct labor 8. Prepare a simple and meaningful performance report (variance report) for direct materials AND direct labor showing: (A picture would be just fine) d) The total budget variance; e) The flexible budget variance (standard cost variance) f) The volume variance 9. NOW ASSUME that the company has chosen to use a standard costing system to record all inventory at standard, show the entries needed (written AND T-accounts) as follows: d) Record the usage of direct labor in production and the direct labor rate and efficiency variances. e) Record payment of direct labor. f) Dispose of the rate and efficiency variances. 10. Interpret each of the labor variances. Give at least 2 possible causes for each, and indicate what person (s) would be primarily responsible 11. Prepare a simple and meaningful performance report (variance report) for direct materials which explains the flexible budget variance (standard cost variance) above. (A picture would be just fine) For class, if time allows: (certainly, feel free to look this over, do the reading and try it for class) 12. Compute the variable overhead spending and efficiency variances. a) Journalize the actual incurring of variable overhead and variable overhead variances. b) Apply variable overhead c) Record variances and close 13. Compute the fixed overhead spending and volume variances. a) Journalize the actual incurring of fixed overhead and fixed overhead variances. b) Apply fixed overhead c) Record variances and close
Expert Answer:
Related Book For
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr
Posted Date:
Students also viewed these accounting questions
-
Alson is the cost accountant at a manufacturer of exquisite glass serving bowls. The materials used for the bowls are inexpensive, but the process is labour intensive. The supervisor decided to use...
-
"internet radios" for streaming audio, and personal video recorders and players. Describe design and evaluation processes that could be used by a start-up company to improve the usability of such...
-
Factors that affect the selection of an inventory costing method do not include: (a) tax effects. (b) balance sheet effects. (c) income statement effects. (d) perpetual vs. periodic inventory system.
-
Should governments support the OLPC project with its nonprofit perspective and low-cost computer over Intel's for- profit Classmate project?
-
What is the difference between periodic and aperiodic real-time tasks?
-
Based on the design, briefly discuss the data collection procedures to be used. Be sure to include the area rea of focus and targeted sample as part of these procedures. Develop a hypothetical...
-
Hopkins Clothiers is a small company that manufactures tall-mens suits. The company has used a standard cost accounting system. In May 2014, 11,200 suits were produced. The following standard and...
-
Traditionally, Hobbits have relied on private provision for their schooling. As the newly elected mayor of the Shire, Samwise Gamgee has decided to launch a public schooling option. The typical...
-
XYZ is a calendar-year corporation that began business on January 1, 2018. For the year, it reported the following information in its current-year audited income statement. Notes with important tax...
-
a program that finds word differences between two sentences. The input begins with the first sentence and the following input line is the second sentence. Assume that the two sentences have the same...
-
Now create a fifth table called cd titles. Include these columns; cd_title, cd_name, artist_id no. add a foreign key constraint that references the primary key in the cd_musicians table.
-
Show your understanding of the garbage can model by explaining what might be in the garbage can for decision making related to 3 of the 4 elements of the model (what is in garbage can from the...
-
Assuming Suppose that Katie is a big movie fan and enjoys renting movies from the local video rental outlet. Assume that she is willing to pay $10 for the first movie she rents for the weekend but...
-
In matlab please. Array access and modification Perform all the following operations in a script using array operations! Make sure you document it properly and minimize the # of operations. Each of...
-
What is the . NET 5 and why is it important? How it is different from . NET Standard and . NET Framework? Explain.
-
The Boston Cranberry Company operated a small facility where berries were unloaded from trucks, washed and packed, then delivered to local convenience stores for sale to consumers. The facility only...
-
Suppose the market is semistrong form efficient. Can you expect to earn excess returns if you make trades based on? a. Your brokers information about record earnings for a stock? b. Rumors about a...
-
Explain the meaning of the following statement: Managing multiculturalism within the international marketing organization and within the markets it serves is what makes international marketing...
-
What is meant by a change agent in export marketing? Give examples of each type of change agent.
-
In mid-2004 the president of Elis Cheesecake Company, Mr Marc Schulman, was reviewing the policies that had guided the international expansion of the firm. In the 1990s the company had recognized the...
-
Baggai Enterprises has an ROA of 10 percent, retains 30 percent of earnings, and has an equity multiplier of 1.25. Mondale Enterprises also has an ROA of 10 percent, but it retains two-thirds of...
-
International Business Machines (NYSE: IBM), which currently pays a dividend of \($3.40\) per share, has been the subject of two other examples in this reading. In one example, an analyst estimated...
-
An analyst is preparing a forecast of dividends for Hoshino Distributors for the next five years. He uses a spreadsheet model with the following assumptions: Sales are $100 million in Year 1. They...
Study smarter with the SolutionInn App