Dvorak Company produces a product that requires three standard hours per unit at a standard hourly rate of $17

Dvorak Company produces a product that requires three standard hours per unit at a standard hourly rate of $17 per hour. If 1,000 units required 2,800 hours at an hourly rate of $16.50 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) cost variance?

Answer:

a. Direct labor rate 

variance (favorable) 

–$1,400 [($16.50 – $17.00) × 2,800 hrs.] 

b. 

Direct labor time 

variance (favorable) 

–$3,400 

[(2,800 hrs. – 3,000 hrs.) × $17.00] 

c. 

Direct labor cost 

–$4,800 

(–$1,400 – $3,400) or 

 variance (favorable)  [($16.50 × 2,800 hrs.) – ($17.00 × 3,000 hrs.)] 

   = $46,200 – $51,000 

Giovanni Company produces a product that requires five standard hours per unit at a standard hourly rate of $30

Giovanni Company produces a product that requires five standard hours per unit at a standard hourly rate of $30 per hour. If 3,500 units required 17,700 hours at an hourly rate of $30.50 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) cost variance?

Answer:

a. Direct labor rate 

variance (unfavorable) 

$8,850 [($30.50 – $30.00) × 17,700 hrs.] 

b. Direct labor time 

variance (unfavorable) 

$6,000 [(17,700 hrs. – 17,500 hrs.) × $30.00] 

c. 

Direct labor cost 

variance (unfavorable) 

$14,850 

($8,850 + $6,000) or 

[($30.50 × 17,700 hrs.) – ($30.00 × 17,500 hrs.)] 

= $539,850 – $525,000 

Dvorak Company produces a product that requires five standard pounds per unit. The standard price is $2.50

Dvorak Company produces a product that requires five standard pounds per unit. The standard price is $2.50 per pound. If 1,000 units required 4,500 pounds, which were purchased at $3.00 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance?

Answer:

a. Direct materials price 

variance (unfavorable) 

$2,250 [($3.00 – $2.50) × 4,500 lbs.] 

b. Direct materials quantity –$1,250 [(4,500 lbs. – 5,000 lbs.) × $2.50] 

 variance (favorable)   

c. 

Direct materials cost 

variance (unfavorable) 

$1,000 

($2,250 – $1,250) or 

[($3.00 × 4,500 lbs.) – ($2.50 × 5,000 lbs.)] 

= $13,500 – $12,500 

Giovanni Company produces a product that requires four standard gallons per unit. The standard price is $34.00

Giovanni Company produces a product that requires four standard gallons per unit. The standard price is $34.00 per gallon. If 3,500 units required 14,400 gallons, which were purchased at $33.25 per gallon, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance?

Answer:


a. Direct materials price 
variance (favorable) 
–$10,800 [($33.25 – $34.00) × 14,400 gal.] 
b. Direct materials quantity $13,600 [(14,400 gal. – 14,000 gal.) × $34.00] 
 variance (unfavorable)   
c. 

Direct materials cost 
variance (unfavorable) 

$2,800 

(–$10,800 + $13,600) or 
[($33.25 × 14,400 gal.) – ($34.00 × 14,000 gal.)] 
= $478,800 – $476,000 

Magnolia Candle Co. pays 10% of its purchases on account in the month of the purchase and 90% in the month

Magnolia Candle Co. pays 10% of its purchases on account in the month of the purchase and 90% in the month following the purchase. If purchases are budgeted to be $11,900 for March and $12,700 for April, what are the budgeted cash payments for purchases on account for April?

Answer:
                                                                                                                                          April
Payments for March purchases (90% × $11,900)…………………………………… $10,710
Payments for April purchases (10% × $12,700)…………………………………………1,270
Total payments for purchases on account………………………………………………  $11,980

LifeTyme Publishers Inc. collects 30% of its sales on account in the month of the sale and 70% in the month

LifeTyme Publishers Inc. collects 30% of its sales on account in the month of the sale and 70% in the month following the sale. If sales on account are budgeted to be $320,000 for June and $350,000 for July, what are the budgeted cash receipts from sales on account for July?

Answer:
                                                                                                                                               July
Collections from June sales (70% × $320,000)…………………………………………   $224,000
Collections from July sales (30% × $350,000)…………………………………………    105,000
Total receipts from sales on account……………………………………………………   $329,000

Prepare a cost of goods sold budget for Magnolia Candle Co., using the information in Practice Exercises 22-3B and 22-4B

Prepare a cost of goods sold budget for Magnolia Candle Co., using the information in Practice Exercises 22-3B and 22-4B. Assume the estimated inventories on January 1, 2014, for finished goods and work in process were $9,800 and $3,600, respectively. Also assume the desired inventories on December 31, 2014, for finished goods and work in process were $12,900 and $3,500, respectively. Factory overhead was budgeted at $109,600.

Answer:

Finished goods inventory, January 1, 2014   $ 9,800 

Work in process inventory, January 1, 2014  $ 3,600  

Direct materials:    

Direct materials inventory, January 1, 2014    

(2,500 × $4.10) $  10,250   

Direct materials purchases (from PE 22–3B) 150,470   

Cost of direct materials available for use $160,720   

Less direct materials inventory,    

December 31, 2014 (2,100 × $4.10) 8,610   

Cost of direct materials placed in    

production $152,110   

Direct labor (from PE 22–4B) 207,760   

Factory overhead 109,600   

Total manufacturing costs  469,470  

Total work in process during period  $473,070  

Less work in process inventory, December 31, 2014  3,500  

Cost of goods manufactured   469,570 

Cost of finished goods available for sale   $479,370 

Less finished goods inventory, December 31, 2014   12,900 

Cost of goods sold   $466,470