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    Question 1 (Accounting)

    Uploaded by

    David David
    The document describes standard costs and actual costs for Helix Company's production of karate robes in April. 1. The materials price variance was $8,580 favorable and the quantity variance was $6,900 unfavorable, resulting in a net favorable spending variance of $1,680. 2. The labor efficiency variance was $12,400 favorable and the rate variance was $11,920 unfavorable, resulting in a net favorable spending variance of $480. 3. The variable overhead spending variance was $17,688 favorable and the efficiency variance was $2,430 unfavorable, resulting in a net unfavorable total variance of $15,258.

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    Question 1 (Accounting)

    Uploaded by

    David David
    175 views2 pages
    The document describes standard costs and actual costs for Helix Company's production of karate robes in April. 1. The materials price variance was $8,580 favorable and the quantity variance was $6,900 unfavorable, resulting in a net favorable spending variance of $1,680. 2. The labor efficiency variance was $12,400 favorable and the rate variance was $11,920 unfavorable, resulting in a net favorable spending variance of $480. 3. The variable overhead spending variance was $17,688 favorable and the efficiency variance was $2,430 unfavorable, resulting in a net unfavorable total variance of $15,258.

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    Question 1(Accounting)

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    The document describes standard costs and actual costs for Helix Company's production of karate robes in April. 1. The materials price variance was $8,580 favorable and the quantity variance was $6,900 unfavorable, resulting in a net favorable spending variance of $1,680. 2. The labor efficiency variance was $12,400 favorable and the rate variance was $11,920 unfavorable, resulting in a net favorable spending variance of $480. 3. The variable overhead spending variance was $17,688 favorable and the efficiency variance was $2,430 unfavorable, resulting in a net unfavorable total variance of $15,258.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    175 views2 pages

    Question 1 (Accounting)

    Uploaded by

    David David
    The document describes standard costs and actual costs for Helix Company's production of karate robes in April. 1. The materials price variance was $8,580 favorable and the quantity variance was $6,900 unfavorable, resulting in a net favorable spending variance of $1,680. 2. The labor efficiency variance was $12,400 favorable and the rate variance was $11,920 unfavorable, resulting in a net favorable spending variance of $480. 3. The variable overhead spending variance was $17,688 favorable and the efficiency variance was $2,430 unfavorable, resulting in a net unfavorable total variance of $15,258.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 2

    Question-1

    Helix Company produces several products in its factory, including a karate robe. The company uses a standard cost
    system to assist in the control of costs. According to the standards that have been set for the robes, the factory should
    work 1,000 direct labor-hours each month and produce 2,000 robes. The standard costs associated with this level of
    production are as follows:

    Total

    Per
    Unit
    of Product

    Direct materials

    41,400

    $ 20.70

    Direct labor

    8,000

    4.00

    3,400

    1.70

    Variable
    manufacturing
    overhead
    (based on direct labor-hours)

    $ 26.40

    During April, the factory worked only 1,100 direct labor-hours and produced 2,400 robes. The following actual costs
    were recorded during the month:
    Per
    Unit
    of Product

    Total
    Direct materials (8,200 yards)

    48,000

    $ 20.00

    Direct labor

    10,080

    4.20

    4,320

    1.80

    Variable manufacturing overhead

    $ 26.00

    At standard, each robe should require 3.00 yards of material. All of the materials purchased during the month were
    used in production.
    1.

    2.

    3.

    Compute the materials price and quantity variances for April: (Indicate the effect of each variance by
    selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).
    Round your intermediate calculations to 2 decimal places.)
    Compute the labor rate and efficiency variances for April:(Indicate the effect of each variance by
    selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).
    Round your intermediate calculations to 2 decimal places.)
    Compute the variable manufacturing overhead rate and efficiency variances for April: (Indicate the effect
    of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e.,
    zero variance). Round your intermediate calculations to 2 decimal places.)

    1. Compute the materials price and quantity variances for April:

    SolutionStandard Quantity Allowed for


    Actual Output, at Standard Price
    (SQ*SP)

    Actual Quantity of input, at


    Standard Price (AQ*SP)

    Actual Quantity of input,


    at Actual Price (AQ*AP)

    7,200 yards**$6.9 per


    Yard=$49,680

    8,200 yards*$6.9 per


    Yard=$56,580

    $48,000

    *$20.70/3.0 Yards=$6.9 per Yard


    **2,400 Units*3.0 yards per unit = 7,200 Yards
    Material Quantity Variance=$49,680-$56,580= $6,900U
    Material Price Variance=$56,580-$48,000= $8,580F
    Spending Variance=$6,900-$8,580=$1,680F
    2. Compute the labor rate and efficiency variances for April:
    SolutionStandard Hours Allowed for
    Actual Output, at Standard Rate
    (SH*SR)

    Actual Hours of input, at


    Standard Rate (AH*SR)

    Actual Hours of input, at


    Actual Rate(AQ*AP)

    480 hours*$20.00 per


    hour=$9,600

    1,100 hours*$20.00 per


    hour=$22,000

    $10,080

    *1,000 standard hours/ 2,000robes=0.2 standard hours per robe


    $4.0 standard cost per robe/0.2 standard hours = $20.0 standard rate
    **2,400 robes*0.2 standard hours per robe = 480 standard hours
    Labor efficiency Variance=$9,600-$22,000= $12,400F
    Labor rate Variance=$22,000-$10,080= $11,920U
    Spending Variance=$12,400-$11,920=$480F
    3. Compute the variable manufacturing overhead rate and efficiency variances for April:
    SolutionVariable Overhead Spending Variance = AH x (AR-SR) =1,100 hours ($3.92 per hour -$20.00 per hour) =$17,688F
    Variable Overhead Efficiency Variance = SR x (AH-SH) =$3.92 per hour (1,100 hours-480 hours)=$2,430U
    Total Variable Overhead Variance = SV + EV = =$17,688F +$2,430U=$15,258U

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