assignment
asf1533
2021-09-01Chapter12varianceanalysisextraQAuncovered.pptxChapter 12
Standard Costs and
Balanced Scorecard
Managerial Accounting Tools for Business Decision-Making
Fifth Canadian Edition
Weygandt Kimmel Kieso Aly
Prepared by Angela Davis, CPA, CA, CFE, MSc
BRIEF EXERCISE 12.1
Standards are stated as a per-unit amount.
Thus, the standards are materials $2.60 ($1,300,000 ÷ 500,000) and labour $3.40 ($1,700,000 ÷ 500,000).
(b) Budgets are stated as a total amount. Thus, the budgeted costs for the year are materials $1,300,000 and labour $1,700,000.
BRIEF EXERCISE 12.2
a. Standard materials price per unit =
$3.15 ($2.50 + $0.40 + $0.25).
Standard materials quantity per unit =
3.5 kilograms (3.0 + 0.5).
Standard materials cost per unit =
$11.025 ($3.15 × 3.5).
.
BRIEF EXERCISE 12.3
Standard direct labour rate per hour =
$17.45 ($15.00 + $0.95 + $1.50).
Standard direct labour hours per unit =
2.0 hours (1.5 + 0.3 + 0.2).
Standard labour cost per unit =
$34.90 ($17.45 × 2.0).
The unfavourable materials quantity variance may be caused by the carelessness or inefficiency of production workers.
Alternatively, inferior quality materials acquired by the purchasing department may cause the excess quantities.
The unfavourable labour price variance may be caused by misallocation of the workforce by the production department. In this case, more experienced workers may have been assigned to tasks normally done by inexperienced workers.
An unfavourable labour variance may also occur when workers are paid higher wages than expected. The manager who authorized the wage increase is responsible for this variance.
Homework P12-41A and P 12-44A
EXERCISE 12.29
(a) Predetermined overhead rate = $ 200,000 ÷ 20,000 = $10/hour
Total overhead variance = Actual overhead – Applied overhead
Total overhead variance = $19,000 – ((900 × 2) × $10) = $1,000 U
Overhead budget variance = Actual – Budgeted overhead
$19,000 – $17,600 = $1,400 U
EXERCISE 12.29 (Continued)
Fixed overhead rate: ( $5,000 × 12) ÷ 20,000 = $3.00
Normal monthly capacity: 20,000 ÷ 12 = 1,666.7 hours
Overhead volume variance
= Fixed overhead rate × [normal capacity – standard hours allowed]
= $3.00 × (1,666.7 – 1,800) = $400 F
(b) The cause of an unfavourable budget variance could be higher than
expected use of indirect materials, indirect labour, and factory supplies,
or increases in indirect manufacturing costs, such as fuel and
maintenance costs. A favourable volume variance would be caused
by production of more units than what is considered normal
capacity.
