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    Acct 18

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    Christine Raiz
    The document discusses standard costs and variances for a manufacturing company. It provides standard costs for direct materials, direct labor, and overhead for a product. It also provides actual production and cost information for July and calculates variances. It then discusses process costing and calculating variances for a company using a standard process costing system.

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    Acct 18

    Uploaded by

    Christine Raiz
    18 views2 pages
    The document discusses standard costs and variances for a manufacturing company. It provides standard costs for direct materials, direct labor, and overhead for a product. It also provides actual production and cost information for July and calculates variances. It then discusses process costing and calculating variances for a company using a standard process costing system.

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    ACCT.18

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    The document discusses standard costs and variances for a manufacturing company. It provides standard costs for direct materials, direct labor, and overhead for a product. It also provides actual production and cost information for July and calculates variances. It then discusses process costing and calculating variances for a company using a standard process costing system.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    18 views2 pages

    Acct 18

    Uploaded by

    Christine Raiz
    The document discusses standard costs and variances for a manufacturing company. It provides standard costs for direct materials, direct labor, and overhead for a product. It also provides actual production and cost information for July and calculates variances. It then discusses process costing and calculating variances for a company using a standard process costing system.

    Copyright:

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

    The Jubilee Corporation manufactures a product with the following standard costs:

    Direct materials - 20 yards at Pl.35 per yard.......... ..................... ............ P 27

    Direct labor - 4 hours at P9 per hour......................................... ...... ......... 36

    Factory overhead - 4 direct labor hours at P7.S0 per hour;

    ratio of variable to fixed factory overhead is 2:1.................................. 30

    Total standard cost per unit of output............... . .. .................................. .. e...93

    Page 3

    Standards are based on normal monthly capacity of 2,400 direct labor hours. The following information
    pertains

    to July:

    Units produced in July..... ......... .. ............. ...................................... ............. 500

    Direct materials purchased - 18,000 yards at Pl.38 per yard ................... P 24,840

    Direct materials used - 9,500 yards

    Direct labor - 2,100 hours at P9.l5 per hour................ .. .. .................. ....... 19,215

    Actual factory overhead.................... ... ............. .............. .. ................. ......... 16,650

    Required:

    1. Compute the following variances and indicated whether they are favorable or unfavorable:

    a. Materials purchase price, price usage, and quantity variances.

    b. Labor rate and efficiency variances.

    c. Factory overhead controllable and volume variances. Show the computation of variable and

    fixed factory overhead per direct labor hour and the total budgeted factory overhead into

    variable and fixed.

    2. Prepare the entries for Number 1 above.

    (AICPA Adapted)

    II - Process Costing and Standard Cost Variance Analysis (With Solution)

    The Cross Company uses a standard process costing system - FIFO method in its one production
    department.

    Material A is added at the beginning of the process, and Material B is added when the units are 90%
    complete.
    Inspection take place at the end of the process, and all spoilage is expected to be abnormal. The
    standard cost of

    abnormal spoilage is charged to a current period expense account. Normal capacity is 7,800 labor hours
    per

    month.

    The standard cost per unit is as follows:

    Material A: 4 gallons at Pl.20 ........ ·...... .. .... ..... ..................................... P 4.80

    Material B; 2 square feet at P.70.......... .................................................. 1.40

    Direct labor: 1 hour at Pll.50...... ................... .. ..................... .............. .. 11.50

    Variable factory overhead: 1 hour at Pl.80.. ... ... .......................... ... ..... 1.80

    Fixed factory overhead: 1 hour at PS.OD . ... .. :........................................ 5.00

    Total. ...... ................................................ ........ .......................... .... ... . P.21,.5.Q

    Additional data for January are as follows:

    a. Beginning work in process inventory: 3.000 units (33 1/3% converted)

    b. Started in process during the month, 11.,ooo units.

    c. Finished during January, 8,000 units.

    d. Ending work in process inventory, 5,000 units (40% converted)

    e. Actual costs incurred are as follows:

    Material A used................ ..... ..................... ..... . . . 50,000 gallons at Pl.00

    Material Bused. ,................... ................... .. ........ 18,000 sq. ft. at P.75

    Direct labor................. .. .... . ... . ..... .. .. . .. ... .... ..... .. 10,200 hours at Pl2.00

    Factory overhead .... ......... ............ ...... ...... ........... P60,100

    Required: .

    1. Compute the January equivalent production for Material A, Material B, and for conversion costs.

    2. Compute the materials price usage and quantity variances for each kind of material, the labor rate

    and labor efficiency variances, and the factory overhead controllable and volume variances. Indicate

    whether the variances are favorable or unfavorable.

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