Question 24: Miller Toy Company manufactures a plastic swimming pool at its West

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Question 24: Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below:

Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to “get things under control.” Upon reviewing the plant’s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool:

Purchased 29,500 pounds of materials at a cost of $2.55 per pound.

Used 24,300 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)

Incurred variable manufacturing overhead cost totaling $8,400 for the month. A total of 2,400 machine-hours was recorded.

Materials price and quantity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Labor rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Variable overhead rate and efficiency variances. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month. (Input all values as positive amounts. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Pick out the two most significant variances that you computed in (1) above. (You may select more than one answer. Single click the box with a check mark for correct answers and double click to empty the box for the wrong answers.)

Question 25:

Koontz Company manufactures a number of products. The standards relating to one of these products
are shown below, along with actual cost data for May.

     The production superintendent was pleased when he saw this report and commented: “This $0.21 excess cost is well within the 2 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product."

     Actual production for the month was 11,000 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials.

Materials price and quantity variances. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).)

Labor rate and efficiency variances. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).)

Variable overhead rate and efficiency variances. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).)

How much of the $0.21 excess unit cost is traceable to each of the variances computed in (1) above. (Input all amounts as positive values.  Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Round your answers to 2 decimal places.)

How much of the $0.21 excess unit cost is traceable to apparent inefficient use of labor time? (Input all values as positive amounts. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Do not round intermediate calculations. Round your final answers to 2 decimal places.)

Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat covers that can be adjusted to fit nearly any small car. The company has a standard cost system in use for all of its products. According to the standards that have been set for the seat covers, the factory should work 1,065 hours each month to produce 2,130 sets of covers. The standard costs associated with this level of production are:

During August, the factory worked only 1,050 direct labor-hours and produced 2,700 sets of covers. The following actual costs were recorded during the month:

At standard, each set of covers should require 2.00 yards of material. All of the materials purchased during the month were used in production.

Compute the materials price and quantity variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).)

Compute the labor rate and efficiency variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).)

Compute the variable overhead rate and efficiency variances for August. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).)

DataSpan, Inc., automated its plant at the start of the current year and installed a flexible manufacturing system. The company is also evaluating its suppliers and moving toward Lean Production. Many adjustment problems have been encountered, including problems relating to performance measurement. After much study, the company has decided to use the performance measures below, and it has gathered data relating to these measures for the first four months of operations.

Month

      Management has asked for your help in computing throughput time, delivery cycle time, and MCE. The following average times have been logged over the last four months:

Average per Month (in days)

  Wait time per order before start
   of production

Compute the manufacturing cycle efficiency (MCE) for each month. (Round your answers to 1 decimal place (i.e., 0.123 should be entered as 12.3).)

Compute the delivery cycle time for each month. (Round your answers to 1 decimal place.)

Refer to the move time, process time, and so forth, given for month 4. Assume that in month 5 the move time, process time, and so forth, are the same as in month 4, except that through the use of Lean Production the company is able to completely eliminate the queue time during production. Compute the new throughput time and MCE. (Round your Throughput Time to 1 decimal place. Round your MCE percentage answer to 1 decimal place (i.e., 0.123 should be entered as 12.3).)

Refer to the move time, process time, and so forth, given for month 4. Assume in month 6 that the move time, process time, and so forth, are again the same as in month 4, except that the company is able to completely eliminate both the queue time during production and the inspection time. Compute the new throughput time and MCE. (Round your Throughput Time to 1 decimal place. Round your MCE percentage answer to 1 decimal place (i.e., 0.123 should be entered as 12.3).)

Question 24: Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below:

Explanation / Answer

Q 24. 1 Material Price Variance= Actual Quantity Used (Standard Price-Actual Price) = 24,300 Pound ($ 2.10 Per Pound-$ 2.55 Per Pound) = -10935 (U) Material Quantity Variance= Standard Price (Standard Quantity-Actual Quantity) = $2.10 Per Pound (24,500-24,300) = 420 (F) 2 Labour Rate Variance= Actual Hours (Standard Rate Per Hour-Actual Rate Per Hour) = 3,400 Hours (7.60-7.30) = 1020 (F) Labour Efficiency Variance Standard Rate Per Hour (Standard Hours-Actual Hours) = 7.6 (7000 Units*0.40 Hours Per Unit-3,400) = -4560 (U) 3 Variable Overhead Rate Variance= Actual Machine Hours (Standard Rate Per Hour-Actual Rate Per Hour) = 2,400 Hours (3.10-3.50) = -960 (U) Variable Overhead Efficiency Variance Standard Rate Per Hour (Standard Hours-Actual Hours) = 3.1 (7000 Units*0.30 Hours Per Unit-2,400) = -930 (U) Material Price Variance= -10935 Material Quantity Variance= 420 Labour Rate Variance= 1020 Labour Efficiency Variance -4560 Variable Overhead Rate Variance= -960 Variable Overhead Efficiency Variance -930 The Most Signifcant Variance is Material Price Variance and Labour Efficiency Variance

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