Cost Management Problem
ete08
exam_3_replacement_project_28129_-_mustafo.xlsxSheet1
| a) Direct Labor Rate Variance = (Actual labor hours*Standard Rate) - Actual Cost | ||||||
| Production = 4900*10 – 52150 = 3150 (A) | ||||||
| Inspection = 2200*20 – 43000 = 1000 (F) | ||||||
| Total | 2150(A) | |||||
| b) Direct labor efficiency variance = Standard cost of actual output – Actual hour*standard rate | ||||||
| For Production, | (1/60)*10 = 1/6 | |||||
| Standard cost of actual output | ||||||
| (1/6)*300000 – 49000 | ||||||
| = 50000 – 49000 = 1000 (F) | ||||||
| Inspection | (2/300)*20 = 4/30 | |||||
| (4/30)*300000 – 44000 | ||||||
| = 40000 – 44000 = 4000 (A) | ||||||
| Total 3000 (A) | ||||||
| c) Direct labor mix variance = standard rate* (Revised standard hours – actual labor hours) | ||||||
| Standard hour | Standard Rate | Amount($) | Actual Hour | Actual Amount($) | AH*AR | Amount($) |
| 5000 | 10 | 50000 | 4900 | 52150 | 4900*10 | 49000 |
| 2000 | 20 | 40000 | 2200 | 43000 | 2200*20 | 44000 |
| 7000 | 90000 | 7100 | 95150 | 93000 | ||
| Production = 10* (7100*(5000/7000) – 4900) | ||||||
| = 1714 (F) | ||||||
| Inspection = 20* (7100*(2000/7000) – 2200) | ||||||
| = 3428 (A) | ||||||
| Total = 1714 (A) | ||||||
| d) Direct Labor Yield Variance = Standard Cost* (actual output- standard output) | ||||||
| Standard output ((1/6) + (2/300)) =7/300 | ||||||
| So, standard output = 7100*(300/7) = 304286 | ||||||
| Standard Cost* (actual output- standard output) | ||||||
| -1285.8 | ||||||
| = 1286 (A) | ||||||
| e) Direct material price variance = | ||||||
| Actual quantity *standard price – actual cost | ||||||
| Peanut butter = (198000*0.30) – (198000*0.28) = 3960 (F) | ||||||
| Bacon = (113000*0.60) – (113000*0.65) = 5650 (A) | ||||||
| Total | = 1690 (A) | |||||
| f) Direct Material Quantity variance = | ||||||
| Standard quantity of peanut butter 0.60* 300000 = 180000 | ||||||
| Standard quantity of bacon 0.40*300000 = 120000 | ||||||
| Standard Price *(standard quantity- actual quantity) | ||||||
| Peanut Butter = 0.30*(180000-198000) = 5400 (A) | ||||||
| Bacon = 0.60* (120000-113000) = 4200 (F) | ||||||
| Total | = 1200 (A) | |||||
| g) Direct Material Mix Variance = Standard Price* (standard mix – actual mix) | ||||||
| Total Input = 198000+113000 = 311000 | ||||||
| Standard mix | ||||||
| Peanut butter = 311000* 0.60 =186600 | ||||||
| Bacon = 311000*0.40 = 124400 | ||||||
| Standard Price* (standard mix – actual mix) | ||||||
| Peanut Butter = 0.30* (186600-198000) = 3420(A) | ||||||
| Bacon = 0.60 *(124400- 113000) = 6840(F) | ||||||
| Total 3420(F) | ||||||
| h) Direct Material Yield Variance(DMYV) | ||||||
| Standard Cost of 1 unit of finished goods | ||||||
| (0.60*0.30+0.4*0.60) = 0.42 | ||||||
| Standard yield = standard output/ standard input*total input | ||||||
| (1/1)*311000 = 311000 | ||||||
| DMYV = Standard Cost of 1 unit of finished goods*(Actual yield – standard yield) | ||||||
| = 0.42(300000 – 311000) | ||||||
| = 4620 (A) | ||||||
| i) Variable overhead spending variance = | ||||||
| Actual hour *standard rate – actual cost | ||||||
| = 7100*6 – 50000 = 7400(A) | ||||||
| j) Variable overhead efficiency variance = | ||||||
| Standard cost for actual output – actual hours *standard rate | ||||||
| = (6*0.20)*300000 – (7100*6) | ||||||
| =36000 – 42600 = 6600 (A) | ||||||
| k) Fixed overhead budget variance = Budgeted fixed overhead costs - Actual fixed overhead costs incurred | ||||||
| = 100000 – 63000 = 37000(F) | ||||||
| l) Fixed Overhead volume variance = Standard cost for actual output – Budgeted fixed overhead | ||||||
| Fixed Overhead Cost absorbed - Budgeted fixed overhead | ||||||
| = 0.02*6000 - 100000 = 99880 (A) | ||||||
|
Jenn: Jenn: Fixed OH volume variance = budgeted fixed overhead - applied fixed overhead. See pg 715 in the book. |
Jenn: Jenn: When computing the DM price variance and the DM quantity variance, you use direct materials used in one and direct materials purchased for another. Refer to book, pg 668 |
