Trueform Products, Inc., produces a broad line of sports equipment and uses a st
ID: 2480462 • Letter: T
Question
Trueform Products, Inc., produces a broad line of sports equipment and uses a standard cost system for control purposes. Last year the company produced 5,100 varsity footballs. The standard costs associated with this football, along with the actual costs incurred last year, are given below (per football):
Standard Actual Cost Cost Direct materials $14.70 Standard: 4.2 feet at $3.50 per foot Actual: 4.7 feet at $3.30 per foot $15.51 Direct labor: 8.32 Standard: 1.60 hours at $5.20 per hour Actual: 1.30 hours at $5.80 per hour 7.54 Variable manufacturing overhead 3.20 Standard: 1.60 hours at $2.00 per hour Actual: 1.30 hours at $2.70 per hour 3.51 Total cost per football $26.22 $26.56 The president was elated when he saw that actual costs exceeded standard costs by only $0.34 per football. He stated, as afraid that our unit cost might get out of hand when we gave out those raises last year in order to stimulate output. But it's obvious our costs are well under control. There was no inventory of materials on hand to start the year. During the year, 23,970 feet of materials were purchased and used in production Required 1. For direct materials a. Compute the price and quantity variances for the year. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Price variance Quantity varianceExplanation / Answer
1a) Material Price variance = ( Actual price - standard price ) * actual quantity = (3.3 - 3.5) * 23970 = 0.20 * 23970 = 4794 favourale Material quantity variance = ( standard quantity - actual quantity) * standard price = (4.2 * 5100 - 23970) * 3.5 = (21420-23970) * 3.5 = 2550 * 3.5 = 8925 unfavourable 1b) 1 Raw materials Dr 83895 Material Price variance Cr 4794 Accounts payable Cr 79101 2 Work in process Dr 74970 Material quantity variance Dr 8925 Raw Materials Cr 83895 2a) Labor price variance = ( Actual rate -standard rate ) * actual hours = (5.8 - 5.2) * 1.3*5100 = 0.60* 6630 = 3978 unfavourale Labor efficiency variance = ( standard hours - actual hours) * standard rate = ( 1.30 * 5100 - 1.6*5100) * 5.20 = ( 6630 - 8160) * 5.20 = 1530 * 5.20 = 7956 unfavourable 2b) Work in process Dr 26520 Labor efficiency variance Dr 3978 Labor efficiency variance Dr 7956 Wages Payable Cr 38454 3) variable overhead rate variance = Actual variable overhead - Actual hours * standard variable overhead rate = 1.30 * 5100 * 2.70 - 1.30 * 5100* 2 = 17901 - 13260 = 4641 unfavourable variable overhead efficiency variance = ( actual hours - standard hours) * standard rate = (1.30 * 5100 -1.60*5100) * 2 = 6630 - 8160 * 2 = 1530 unfavourable
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.