Project #25144 - Acct 631 Chapter 10 Homework

Canandaigua Container Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production-engineering staff and the controller.

  

  Direct Labor:

  Direct Material:

     Quantity, 0.17 hour

     Quantity, 8 kilograms  

     Rate, $8.50 per hour

     Price, $0.44 per kilogram  


  

Actual material purchases amounted to 235,200 kilograms at $0.500 per kilogram. Actual costs incurred in the production of 24,000 units were as follows:

 

 

     Direct labor:

  $42,960 for 4,800 hours

     Direct material:

  $101,400 for 202,800 kilograms


 

1.

Use the variance formulas to compute the direct-material price and quantity variances, the direct-material purchase price variance, and the direct-labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Do not round intermediate calculations.)

 

 

During March, Manhattan Fabrics Corporation manufactured 570 units of a special multilayer fabric with the trade name Stylex. The following information from the Stylex production department also pertains to March.


 

 

 

 

 

  Direct material purchased: 18,700 yards at $1.45 per yard

$

27,115

 

  Direct material used: 10,200 yards at $1.45 per yard

 

14,790

 

  Direct labor: 2,800 hours at $9.22 per hour

 

25,816

 


 


 

The standard prime costs for one unit of Stylex are as follows:


 

 

 

 

 

  Direct material: 20 yards at $1.42 per yard

$

28.40

 

  Direct labor: 4 hours at $6.00 per hour

 

24.00

 

 


 


 


 

  Total standard prime cost per unit of output

$

52.40

 

 



 



 



 


 

 

 

 

1.     Compute the following variances for the month of March. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).


Direct-material price variance

Direct-material quantity variance

Direct-material purchase price variance

Direct-labor rate variance

Direct-labor efficiency variance

 

 

Harrison Wolfe operates a residential landscaping business in an affluent suburb of Atlanta. In an effort to provide quality service, he has concentrated solely on the design and installation of upscale landscaping plans (e.g., trees, shrubs, fountains, and lighting). With his clients continually requesting additional services, Wolfe recently expanded into lawn maintenance, including fertilization.

     The following data relate to his first year’s experience with 59 fertilization clients. Each client required nine applications throughout the year and was billed $44.00 per application.

 

Two applications involved Type I fertilizer, which contains a special ingredient for weed control. The remaining seven applications involved Type II fertilizer.

Wolfe purchased 6,000 pounds of Type I fertilizer at $0.63 per pound and 11,000 pounds of Type II fertilizer at $0.50 per pound. Actual usage amounted to 4,660 pounds of Type I and 8,300 pounds of Type II.

A new, part-time employee was hired to spread the fertilizer. Wolfe had to pay premium wages of $12.50 per hour because of a very tight labor market; the employee logged a total of 185 hours at client residences.

Based on previous knowledge of the operation, articles in trade journals, and conversations with other landscapers, Wolfe established the following standards:

 

Typical hourly wage rate of landscape personnel: $10.00

Labor time per application: 40 minutes

Fertilizer purchase price per pound: Type I, $0.60; Type II, $0.52

Fertilizer usage: 50 pounds per application

 

     Unfortunately, Wolfe's new lawn fertilization service did not go as smoothly as planned, with customer complaints being much higher than expected.

 

 

 

1.

Compute Wolfe's direct-material variances for each type of fertilizer. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Round your answers to 2 decimal place.)

 

 

 

2.

Compute the direct-labor variances. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Do not round intermediate calculations and round your final answers to 2 decimal place.)

   

 

 

3-a.

Compute the actual cost of the client applications. (Note: Exclude any fertilizer in inventory, as remaining fertilizer can be used next year.) (Round your answer to 2 decimal place.)

 

3-b.

Calculate the profit or loss of Wolfe's new lawn fertilization service. (Round your answer to 2 decimal place.)

 

4.

On the basis of the variances that you computed in parts (1) and (2) was the new service a success from an overall cost-control perspective? (Round your answer to 2 decimal place.)

 

The following data pertain to Colgate Palmolive's liquid filling line during the first 10 months of a particular year. The standard ratio of direct-labor hours to machine hours is 4:1. The standard direct-labor rate is $16.18.

 

Colgate Palmolive: Direct-Labor Efficiency Variance Data*


 

Units
Produced

Machine
Hours

Standard
Direct-Labor
Hours

Actual
Direct-Labor
Hours

Direct-Labor
Efficiency
Variance

  January

 

50,698

 

 

176.5

 

 

706.00

 

 

396.00

 

$

5,016

 

  February

 

32,163

 

 

111.3

 

 

445.20

 

 

236.00

 

 

3,385

 

  March

 

186,279

 

 

574.0

 

 

2,296.00

 

 

1,112.00

 

 

19,157

 

  April

 

214,474

 

 

729.2

 

 

2,916.80

 

 

1,528.75

 

 

22,459

 

  May

 

49,490

 

 

171.0

 

 

684.00

 

 

386.00

 

 

4,822

 

  June

 

83,206

 

 

254.0

 

 

1,016.00

 

 

580.50

 

 

7,046

 

  July

 

36,648

 

 

115.0

 

 

460.00

 

 

305.00

 

 

2,508

 

  August

 

33,923

 

 

107.0

 

 

428.00

 

 

350.50

 

 

1,254

 

  September

 

32,110

 

 

107.0

 

 

428.00

 

 

360.50

 

 

1,092

 

  October

 

28,741

 

 

83.0

 

 

332.00

 

 

202.00

 

 

2,103

 


 

 

*Source of data: Alan S. Levitan and Sidney J. Baxendale, "Analyzing the Labor Efficiency Variance to Signal Process Engineering Problems," Journal of Cost Management 6, no. 2 (Summer 1992), p. 70.

 

 

1.

Calculate the following amounts.

 

a.

The standard direct-labor cost for each of the 10 months. (Round intermediate calculation to 2 decimal places and final answers to nearest whole dollar amount.)

 

b.

For each month, (expression error) percent of the standard direct-labor cost. (Round your final answers to the nearest whole dollar amount.)

 

Gandolph Game Company has established the following standards for the prime costs of one unit of its chief product, dartboards.

 

 

Standard Cost

Standard Quantity

Standard Price or Rate

  Direct material

$

37.70

 

 

13.00

 kilograms

$

2.90

 per kilogram

  Direct labor

 

29.40

 

 

2.10

 hour

$

14.00

 per hour

 




 

 

 

 

 

 

  Total

$

67.10

 

 

 

 

 

 

 

 







 

 

 

 

 

 


 

 

     During September, Gandolph purchased 263,000 kilograms of direct material at a total cost of $810,040. The total wages for September were $600,300, 90 percent of which were for direct labor. Gandolph manufactured 18,000 dartboards during September, using 225,000 kilograms of the direct material purchased in September and 41,400 direct-labor hours.

 

 

 

1.     Compute the following variances for September. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).)

 

 

Subject Mathematics
Due By (Pacific Time) 03/19/2014 12:00 am
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