Chapter 23: Q19RQ (page 1305)
Briefly describe how journal entries differ in a standard cost system.
The difference in journal entries are in raw material, WIP inventory, finished goods inventory and variances
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Question:Garland Company expects to sell 600 wreaths in December 2018, but wants to plan for 100 more and 100 less than expected. The wreaths sell for \(5.00 each and have variable costs of \)2.00 each. Fixed costs are expected to be $500 for the month. Prepare a flexible budget for 500, 600, and 700 wreaths.
Preparing a standard cost income statement Review your results from Problem P2333B.
Middleton’s actual and standard sales price per mug is $5. Prepare the standard cost income statement for July 2018.
Matthews Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2018, using 143,000 square feet of extruded vinyl purchased at \(1.30 per square foot. Production required 400 direct labor hours that cost \)16.00 per hour. The direct materials standard was seven square feet of vinyl per fender, at a standard cost of \(1.35 per square foot. The labor standard was 0.028 direct labor hour per fender, at a standard cost of \)15.00 per hour.
Compute the cost and efficiency variances for direct materials and direct labor. Does the pattern of variances suggest Matthews Fender’s managers have been making tradeoffs? Explain.
Computing standard overhead allocation rates
The following information relates to Morgan, Inc.’s overhead costs for the month:
Static budget variable overhead | \(7,800 |
Static budget fixed overhead | \)3,900 |
Static budget direct labor hours | 1,300 hours |
Static budget number of units | 5,200 units |
Morgan allocates manufacturing overhead to production based on standard direct labor hours. Compute the standard variable overhead allocation rate and the standard fixed overhead allocation rate.
Question:Match the variance to the correct definition.
Variance Definition
2. Cost variance
3. Efficiency variance
4. Flexible budget variance
5. Sales volume variance
6. Static budget variance
a. The difference between the expected results in the flexible budget for the actual units sold and the static budget.
b. The difference between actual results and the expected results in the flexible budget for the actual units sold.
c. Measures how well the business keeps unit costs of material and labor inputs within standards.
d. The difference between actual results and the expected results in the static budget.
e. Measures how well the business uses its materials or human resources
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