In November 2013, DayTime Publishing Company\'s costs and quantities of paper co

Question

In November 2013, DayTime Publishing Company's costs and quantities of paper consumed in manufacturing its 2014 Executive Planner

and Calendar were as follows:

- Actual unit purchase price:

- Standard unit price:

- Standard quantity for good production:

- Actual quantity purchased during Nov:

- Actual quantity used in Nov:

a. Calculate the total cost of purchases for Nov.

b. Compute the material price variance (based on quantity purchased)

c. Calculate the material quantity variance

Nelson Co. manufactures a product that required 3.5 machine hours per unit. The variable and fixed overhead rates were computed using

expected capacity of 144,000 units (produced evenly throughout the year) and expected variable and fixed overhead cost, respectively,

of $2,016,000 and $3,528,000. In October, Nelson manufactured 11,900 units using 41,800 machine hours. October variable overhead

costs were $165,000; fixed overhead costs were $294,500.

a. What are the standard variable and fixed overhead rates?

b. Compute the variable overhead variances

c. Compute the fixed overhead variances

d. Explain the volume variance computed in (c).

In November 2013, DayTime Publishing Company's costs and quantities of paper consumed in manufacturing its 2014 Executive Planner

and Calendar were as follows:

- Actual unit purchase price:

$0.13/page

- Standard unit price:

$0.14/page

- Standard quantity for good production:

97,900 pages

- Actual quantity purchased during Nov:

115,000 pages

- Actual quantity used in Nov:

100,000 pages

a. Calculate the total cost of purchases for Nov.

b. Compute the material price variance (based on quantity purchased)

c. Calculate the material quantity variance

Explanation / Answer

1)

a) Total purchases = AP × AQ(Purchased) = $0.13 × 115,000 $14,950.00 b) Material price variance = (AP × AQ( Purchased) – (SP × AQ(purchased) Material price variance = ($0.13 × 115,000) – ($0.14 × 115,000) $1,150.00 F c) Material quantity variance =(SP×AQ (used)–(SP×SQ) Material quantity variance = ($0.14 × 100,000) – ($0.14 × 97,900) $294.00 UF

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