Standard Costing_Questions on Variances

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Exercise 11-2
Hnak Itzek manufactures and sells homemade wine, and he wants to develop a standard cost per gallon. The following are required for production of a 30-gallon batch.

2,800 ounces of grape concentrate at $0.04 per ounce
39 pounds of granulated sugar at $0.49 per pound
53 lemons at $0.71 each
120 yeast tablets at $0.22 each
120 nutrient tablets at $0.15 each
2,600 ounces of water at $0.004 per ounce

Hank estimates that 5% of the grape concentrate is wasted, 12% of the sugar is lost, and 33% of the lemons cannot be used.

Compute the standard cost of the ingredients for one gallon of wine. (Round intermediate calculations and final answer to 2 decimal places, e.g. 1.25.)

Standard Cost Per Gallon $[removed]
 
 
 
 
Exercise 11-3
Kimm Company has gathered the following information about its product.

Direct materials: Each unit of product contains 3.70 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.60 pounds. Materials cost $1 per pound, but Kimm always takes the 1.53% cash discount all of its suppliers offer. Freight costs average $0.27 per pound.

Direct labor. Each unit requires 2.70 hours of labor. Setup, cleanup, and downtime average 0.19 hours per unit. The average hourly pay rate of Kimm’s employees is $12.60. Payroll taxes and fringe benefits are an additional $3.10 per hour.

Manufacturing overhead. Overhead is applied at a rate of $6.10 per direct labor hour.

Compute Kimm’s total standard cost per unit. (Round answer to 2 decimal places, e.g. 1.25.)

Total standard cost per unit $[removed]
 
 
 
 
Exercise 11-6
Lewis Company’s standard labor cost of producing one unit of Product DD is 3.70 hours at the rate of $12.00 per hour. During August, 42,500 hours of labor are incurred at a cost of $12.14 per hour to produce 11,300 units of Product DD.

(a) Compute the total labor variance.

Total labor variance $[removed] [removed]

(b) Compute the labor price and quantity variances.

Labor price variance $[removed] [removed]
Labor quantity variance $[removed] [removed]

(c) Compute the labor price and quantity variances, assuming the standard is 3.92 hours of direct labor at $12.28 per hour.

Labor price variance $[removed] [removed]
Labor quantity variance $[removed] [removed]
 
 
 
 
Exercise 11-8
The following direct materials and direct labor data pertain to the operations of Laurel Company for the month of August.

Costs
Actual labor rate $14 per hour
Actual materials price $224 per ton
Standard labor rate $13 per hour
Standard materials price $225 per ton

Quantities
Actual hours incurred and used 4,107 hours
Actual quantity of materials purchased and used 1,091 tons
Standard hours used 4,187 hours
Standard quantity of materials used 1,071 tons

Compute the total, price, and quantity variances for materials and labor.

Total materials variance $[removed] [removed]
Materials price variance $[removed] [removed]
Materials quantity variance $[removed] [removed]
Total labor variance $[removed] [removed]
Labor price variance $[removed] [removed]
Labor quantity variance $[removed] [removed]
 
 
 
 
Exercise 11-11
Manufacturing overhead data for the production of Product H by Smart Company are as follows.

Overhead incurred for 53,100 actual direct labor hours worked $428,800
Overhead rate (variable $7; fixed $1) at normal capacity of 41,100 direct labor hours $8
Standard hours allowed for work done 54,010

Compute the total overhead variance.

Total overhead variance $[removed] [removed]
 
 
 
 
Problem 11-1A
Costello Corporation manufactures a single product. The standard cost per unit of product is shown below.

Direct materials—2 pound plastic at $6.38 per pound $ 12.76
Direct labor—1.50 hours at $11.00 per hour 16.50
Variable manufacturing overhead 11.25
Fixed manufacturing overhead 6.75
Total standard cost per unit $47.26

The predetermined manufacturing overhead rate is $12 per direct labor hour ($18.00 ÷ 1.50). It was computed from a master manufacturing overhead budget based on normal production of 8,250 direct labor hours (5,500 units) for the month. The master budget showed total variable costs of $61,875 ($7.50 per hour) and total fixed overhead costs of $37,125 ($4.50 per hour). Actual costs for October in producing 4,200 units were as follows.

Direct materials (8,510 pounds) $ 55,741
Direct labor (6,190 hours) 69,823
Variable overhead 53,523
Fixed overhead 23,877
    Total manufacturing costs $202,964

The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored.

(a) Compute all of the materials and labor variances. (Round answers to 0 decimal places, e.g. 125.)

Total materials variance $[removed] [removed]
Materials price variance $[removed] [removed]
Materials quantity variance $[removed] [removed]
Total labor variance $[removed] [removed]
Labor price variance $[removed] [removed]
Labor quantity variance $[removed] [removed]

(b) Compute the total overhead variance.

Total overhead variance $[removed] [removed]
 
 
 
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