Standard Costs:

Direct Material Direct Labor Variable Overhead Total standard variable cost/unit

Standard Quantity

5 pounds 2 hours 2 hours

Standard Price

$8 per pound $14 per hour $5 per hour

Total Amount $40.0 $28.0 $10.0 $78

Information for March:

Planning budget for March: 25,000 units produced & sold Actual March: 30,000 units produced & sold

a) Purchased 160,000 pounds of material -- all used in production $7.50 per pound

b) Direct-labor hours 55,000 $15.00 per hour

c) Total VOH was $280,500

d) Advertising Sales Salaries & Commissions Shipping $115,000

$210,000 $455,000

How much raw materials costs would be included in the flexible budget for March?

What are the raw materials price & quantity variances for March? What are the journal entries associated with these variances?

What would be the raw materials price & quantity variances in March with the following changed:

Raw materials purchased Purchase price Raw materials used

170,000 pounds $7.50 per pound

160,000 pounds

What direct labor cost would be included in the flexible budget for March:

What is the direct labor rate & efficiency variances in March? What are the journal entries associated with these variances?

What variable manufacturing overhead cost would be included in the flexible budget for March?

What are the variable overhead rate & efficiency variances for March?

What amounts of advertising, sales salaries & commissions, and shipping would be included in the flexible budget for March?

What are the spending variances related to advertising, sales salaries & commissions, and shipping for March?

BA213 Inc

Cost Formulas:

Advertising Sales salaries & commissions Shipping expenses

Fixed Cost Per Month $200,000 $100,000

Variabl Cost Per Unit Sold

$12 $3

**USE THE ATTACHED VARIANCE GRIDS THE ANSWER THE FOLLOWING QUESTIONS***

General Variance Grid Direct Materials -- Direct Labor -- Variable Overhead (VOH)

SQ Standard quantity that should be used for each of the units acutally produced SP Standard price or rate that we planned to pay for the materials/labor AQ Actual quantity used to produce the actual units AP Actual price or rate paid for the materials/labor purchased/used

Change in Quantity SQxUnits Produced Change in Efficiency AQ AQ

XXX Change in Price

SP

(1)

SP

(2)

Spending Variance (1)-(3)

Debit

Change in Rate AP (3)

Price Variance Rate Variance (2)-(3)

Credit

Quantity Variance Efficiency Variance (1)-(2)

Journal Entries: Account

General Variance Grid

Direct Materials

The quantity purchased in the same as the quantity used.

SQ Standard quantity that should be used for each of the units acutally produced SP Standard price or rate that we planned to pay for the material/labor AQ Actual quantity used to produce the actual units AP Actual price or rate paid for the materials/labor purchased/used

Change in Quantity

SQxUnits Produced XXX

Change in Price

SP SP AP

AQ AQ

Journal Entries: Account

(1)

(2)

Spending Variance (1)-(3)

Debit

(3)

Quantity Variance (1)-(2)

Price Variance (2)-(3)

Credit

DM Used/Purchased Split Variance Grid Direct Material purchased in large quantities then used later is smaller quantities

SQ Standard quantity that should be used for each of the units acutally produced SP Standard price or rate that we planned to pay for the materials AQ Actual quantity used to produce the actual units AP Actual price or rate paid for the materials purchased/used

Change in Quantity

Quantity Used in Production -- smaller quantities

SQxUnits Produced XX

SP

(1)

AQ Used SP (2)

Quantity Variance (1)-(2)

AQ Purchased XX

AQ Purchased AP (4)

Journal Entries: Account

SP

(3)

Debit

Change in Price

Price Variance (3)-(4)

Credit

Quantity Purchased -- large quantities

General Variance Grid Direct Labor

SQ Standard quantity that should be used for each of the units acutally produced SP Standard price or rate that we planned to pay for the material or labor AQ Actual quantity used to produce the actual units AP Actual price or rate paid for the materials/labor purchased/used

Change in Efficiency

SQxUnits Produced XXX

Change in Rate

SP SP AP

AQ AQ

Journal Entries: Account

(1)

(2)

Spending Variance (1)-(3)

Debit

(3)

Efficiency Variance (1)-(2)

Rate Variance (2)-(3)

Credit

General Variance Grid Variable Overhead (VOH)

SQ Standard quantity that should be used for each of the units acutally produced SP Standard price or rate that we planned to pay for the material or labor AQ Actual quantity used to produce the actual units AP Actual price or rate paid for the materials purchased/used

Change in Efficiency

SQxUnits Produced XXX

Change in Rate

SP SP AP

AQ AQ

(1)

(2)

Spending Variance (1)-(3)

(3)