STANDARD COSTING (Solutions)

Management Accounting
Assignment No (Standard Costing)
Problem No 1: ( Kyle Company)
(A)
MQV (8,000 – 7,500) × $ 4 $2,000 U
1,500 × 5 lbs = 7,500 lbs

Total Mat Cost variance = MPV + MQV
$ 4850 U = MPV + 2,000 U
MPV = 2,850
MPV = (A. Price - $ 4) × 8,200 = 2,000 U

A. Price = 35,650 ÷ 8,200 = $4.3475
(B)
LEV (825– 750) × $ 10 $750 U
1,500 × 0.5 hours = 750 hours
LRV = (A. Rate - $ 10) × 825 = 165 U

A. Rate = $8,415 ÷ 825 = $ 10.20
Total Labor Cost variance = LRV + LEV
$ 915 U = LRV + 750 U
LRV = $165 U
Problem No 2: ( Sullivan Tuxedo Company)
MPV
Black (1.85 – 1.80) × 2,500 $125 U
White (1.40– 1.50) × 1,200 $120 F
MQV
Black (2,300 – 2,250) × $1.80 $90 U
White (1,200– 1,125) × $1.50 $112.50 U
450×5 = 2,250
450×2.5 =1,125
Black:
Direct material (2,500×$1.80) $4,500

Material Price variance 125
Accounts payable (2,500×$1.85) $4,625
Work in process (2,250 × $1.80) $4,050

Material quantity variance 90
Direct material (2,300×$1.80) $4,140
White:
Direct material (1,200×$1.50) $1,800

Accounts payable (1,200×$1.40) $1,680
Material price variance 120
Work in process (1,125 × $1.50) $1,687.50

Material quantity variance 112.50
Direct material (1,200×$1.50) $1,800
(B)
LRV (9.80 – 9.50) × 960 $288 U

LEV (960 – 900) × $9.50 $570 U
450×2 = 900
Direct labor (960×$9.50) $9,120

LRV 288
Payroll (960 ×9.80) $9,408
Work in process (900 × $9.50) $8,550

LEV 570
Direct labor $9,120
Problem No 3: (Pacific Furniture)
Actual Price = $259,120 ÷ 12,640 = $20.50

Direct Materials
Price Variance = (20.50 – 20) × 12,640 = $6,320 U
Efficiency Variance = (11,850 – 750×16) × $20 = $3,000 F
Direct Labor
Rate Variance = (31 – 20) × 2,325 Hours = $2,325 U
Usage Variance = (2,325 – 750×3) × $30 = $2,250 U
Problem No 4: (Chemical, Inc.)
Direct Materials
Price Variance = (3.10 – 3) × 100,000 = $10,000 U
Efficiency Variance = (98,073 – 9810×10) × $3 = $81 F
Direct Labor
Rate Variance = (21 – 20) × 4,900 = $4,900 U
Usage Variance = (4,900 – 9810×0.5) × $20 = $100 F
a. Materials (98,100×3) $294,300

MPV 10,000
A/P (100,000×3.10) $310,000
b. WIP (98,100×3) $294,300

Materials(98,073×3) 294,219
MEV 81
c. WIP (9810×0.5) × 20 $98,100

LRV 4,900
Wages/P (4,900×21) 102,900
LUV 100
Problem No 5: (Bovar Company)
1. Standard DL hours allowed for actual output achieved

= 4,000 × 0.5 = 2,000 Hours
2. Actual DL hours worked

LEV = (Actual Hours – Standard Hours) × Standard Price
-2,000 = (Actual Hours – 4,000×0.5) × $20
Actual Hours = 38,000÷20 = 1,900 Hours
3. Actual DL Rate
LRV = (Actual Rate – Standard Rate) × Actual hours
1,900 = (Actual Rate – $20) × 1,900 hours
Actual Rate = 39,900÷1,900 = $21
4. Standard quantity of DM allowed

4,000 × 3 Kg = 12,000 Kg
5. Actual quantity of DM used
MEV = (Actual quantity – Standard quantity) × Standard Price
2,500 = (Actual quantity – 12,000 Kg) × $5
Actual quantity = 62,500÷5 = 12,500 Kg
6. Actual quantity of DM purchased in Kg

MPV = (Actual Price – Standard Price) × DM purchased
3,250 = (Actual Price × DM purchased – Standard Price × DM purchased)
3,250 = (68,250 - $5 × DM purchased)
DM purchased = 65,000÷5 = 13,000 Kg
7. Actual DM price per Kg

= 13,000 Kg × Actual Price = $68,250
Actual Price = $5.25
 Debit variances are unfavorable variance and shows as +

 Credit variances are favorable variance and shows as -
Problem No 6 (O’Shea Company)
Direct Material
MPV = (16.50- 15) × 6,000 = $9,000 U
MEV = (4,400 -4,000) × $15= $6,000 U
Direct Labor
LRV = (12.40- 12) × 3,250 = $1,300 U
LEV = (3,250 -3,000) × $12= $3,000 U
a. Material (6,000×15) 90,000

MPV 9,000
Accounts payable 99,000
b. WIP (4,000×15) 60,000
MEV 6,000
Materials (4,000×16.50) 66,000
c. WIP (3,000×12) 36,000
LRV 1,300
LEV 3,000
Wages payable (3,250×12.40) 40,300
Problem No 7:( Aquafloat)

a). Direct-labor rate variance for November.
LRV = (A. Rate – S. Rate) × A. Hours
= (8.24 -8.20) × 36,500 = $1,460 U
300,760÷36,500 = $8.24
b). Direct-labor efficiency variance for November.
Units completed 5,600 × 6 hours per unit = 33,600 hours
Partial completed 800 × 0.75 × 6 hours = 3,600
37,200
LEV = (A. Hours – S. Hours) × S. Hours
= (36,500 – 37,200) × 4 8.20 = $5,740 F
c). Actual kilograms of material used in the production process during November
Units completed 5,600 × 8 = 44,800 Kg
Partial completed 800 × 8 = 6,400
51,200 Kg
MQV = ( A.Q – S.Q) × S. Rate
1500 = ( A.Q – 51,200) × $5
Actual Quantity = 51,500 Kg
d). Actual price paid per kilogram of direct material in November.
Actual price paid = 249,250 ÷ 50,000 = $ 4.985 per Kg
e). Total amounts of DM and DL cost transferred to FG inventory during November.
DM cost transferred 5,600×$40($5×8) $224,000
DL cost transferred 5,600×$49.20 275,520
$499,520
f). The total amount of DM and DL cost in the ending balance of WIP inventory at the
end of November.
DM 800×$40 = 32,000
DL 800×75%×49.20 = 29,520
61,520
2.
a) DM 250,000
MPV 750
A/P 249,250
MPV = (4.985 – 5) ×50,000 = 750F
b) WIP 256,000 (51,200×5)
MQV 1,500
DM 257,500(51,500×5)
c) WIP 305,040 (37,200×$8.20)
LRV 1,460
LEV 5,740
W/P 300,760
Problem No 8: (Athena Can Company)
MPV = (0.81 – 0.80) × 240,000 = $2,400 U
MQV = (210,000 – (4×50,000)) × 0.80 = $8,000 U
Total = 2,400 U + 8,000 U = $10,400 U
LRV = (16.30 – 16) × 13,000 = $3,900 U
LEV = (13,000 – (0.25×50,000)) × 16 = $8,000 U
Total = 3,900 U + 8,000 U = $11,900 U
2. Prepare journal entries to
 Record the purchase of direct material on account

 Add direct-material and direct labor variances
 Record the direct material and direct labor variances
 Close these variances into CGS.
1. DM (240,000×0.80) 192,000
MPV 2,400
A/P (240,000×0.81) 194,400
2. WIP 160,000
MQV 8,000
DM 168,000
3. WIP 200,000
LRV 3,900
LEV 8,000
Wages payable 211,900
4. CGS 22,300
MPV 2,400
MQV 8,000
LRV 3,900
LEV 8,000

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Management Accounting

Assignment No (Standard Costing)

Problem No 1: ( Kyle Company)

1,500 × 5 lbs = 7,500 lbs

MPV = (A. Price - $ 4) × 8,200 = 2,000 U

LEV (825– 750) × $ 10 $750 U

1,500 × 0.5 hours = 750 hours

LRV = (A. Rate - $ 10) × 825 = 165 U

Problem No 2: ( Sullivan Tuxedo Company)

Direct material (2,500×$1.80) $4,500

Work in process (2,250 × $1.80) $4,050

Direct material (1,200×$1.50) $1,800

Work in process (1,125 × $1.50) $1,687.50

LRV (9.80 – 9.50) × 960 $288 U

Direct labor (960×$9.50) $9,120

Work in process (900 × $9.50) $8,550

Problem No 3: (Pacific Furniture)

Actual Price = $259,120 ÷ 12,640 = $20.50

a. Materials (98,100×3) $294,300

b. WIP (98,100×3) $294,300

c. WIP (9810×0.5) × 20 $98,100

Problem No 5: (Bovar Company)

1. Standard DL hours allowed for actual output achieved

2. Actual DL hours worked

4. Standard quantity of DM allowed

6. Actual quantity of DM purchased in Kg

7. Actual DM price per Kg

 Debit variances are unfavorable variance and shows as +

Problem No 6 (O’Shea Company)

a. Material (6,000×15) 90,000

Wages payable (3,250×12.40) 40,300

Problem No 7:( Aquafloat)

MQV = (210,000 – (4×50,000)) × 0.80 = $8,000 U

Total = 2,400 U + 8,000 U = $10,400 U

LRV = (16.30 – 16) × 13,000 = $3,900 U

LEV = (13,000 – (0.25×50,000)) × 16 = $8,000 U

Total = 3,900 U + 8,000 U = $11,900 U

2. Prepare journal entries to

 Record the purchase of direct material on account

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