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Sva PS#1 Ak

Problem 1: - Material purchase price variance was $12,300 favorable - Labor rate variance was $1,210 favorable - Variable overhead efficiency variance was $1,000 unfavorable - Fixed overhead spending variance was $2,250 unfavorable - Total overhead variance was $1,450 unfavorable Problem 2: - Material price variance was $43,005 favorable - Material mix variance was $16,470 unfavorable - Material yield variance was $83,722 unfavorable - Labor rate variance was $34,770 favorable - Labor mix variance was $108

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61 views5 pages

Sva PS#1 Ak

Problem 1: - Material purchase price variance was $12,300 favorable - Labor rate variance was $1,210 favorable - Variable overhead efficiency variance was $1,000 unfavorable - Fixed overhead spending variance was $2,250 unfavorable - Total overhead variance was $1,450 unfavorable Problem 2: - Material price variance was $43,005 favorable - Material mix variance was $16,470 unfavorable - Material yield variance was $83,722 unfavorable - Labor rate variance was $34,770 favorable - Labor mix variance was $108

Uploaded by

maica G.
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© © All Rights Reserved
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ACC 223

SVA PS#1

Problem No. 1: The Harmony Co. has made the following information available for its
production facility for July 2019. Fixed overhead was estimated at 19,250
machine hours for the production cycle. Actual machine hours for the period were
18,800, which generated 4,000 units.

Material purchased (82,000 pieces) P340,300


Material quantity variance $6,400 U
Machine hours used (18,800 hours)
VOH spending variance P50 U
Actual fixed overhead P60,000
Actual labor cost P36,300
Actual labor hours 6,050

Harmony’s standard costs are as follows:

Direct material 20 pieces @ $4 per piece


Direct labor 1.5 hours @ $6.20 per hour
Variable overhead
(applied on a machine hour basis) 4.8 hours @ $2.50 per hour
Fixed overhead
(applied on a machine hour basis) 4.8 hours @ $3 per hour

Determine the following items:


a. material purchase price variance
b. standard quantity allowed for material
c. total standard cost of material allowed
d. actual quantity of material used
e. labor rate variance
f. standard hours allowed for labor
g. total standard cost of labor allowed
h. labor efficiency variance
i. actual variable overhead incurred
j. standard machine hours allowed
k. variable overhead efficiency variance
l. budgeted fixed overhead
m. applied fixed overhead
n. fixed overhead spending variance
o. volume variance
p. total overhead variance
ANSWER:
a. actual material cost P340,300
actual pieces at standard cost (82,000 × P4) 328,000
material purchase price variance P 12,300
F
b. 4,000 units × 20 pieces per unit = 80,000 standard quantity allowed
c. total standard cost of material (80,000 × P4) P320,000
d. standard cost of actual material used
P320,000 + P6,400 U quantity variance
$326,400  $4 = 81,600 actual pieces used
e. actual labor cost $36,300
6,050 actual DLHs × P6.20 37,510
labor rate variance P 1,210
F
f. 4,000 units × 1.5 standard hours per unit 6,000
SHA
g. 6,000 SHA × P6.20 $37,200
h. actual hours × standard rate (from e) $37,510
standard cost of labor allowed (from g) 37,200
labor efficiency variance $ 310
U
i. actual machine hours × standard VOH rate (18,800 × $2.50) $47,000
VOH spending variance 50
U
actual VOH $47,050
j. 4,000 units × 4.8 standard hours per unit = 19,200 MH allowed
k. standard hours allowed (from j) × standard VOH rate
(19,200 × $2.50) $48,000
actual machine hours × standard rate (from i)
(18,800 × $2.50) 47,000
variable overhead efficiency variance $ 1,000
U
l. 19,250 machine hours × $3 $57,750
m. 4,000 units × 4.8 hours per unit × $3.00 $57,600
n. actual fixed overhead $60,000
budgeted fixed overhead (from l) 57,750
fixed overhead spending variance $ 2,250
U
o. budgeted fixed overhead (from l) $57,750
applied fixed overhead (from m) 57,600
volume variance $ 150
U
p. total actual overhead $107,050
[$60,000 + $47,050 (from i)]
total applied overhead (19,200 SHA × $5.50) 105,600
Total overhead variance $ 1,450
U
DIFFICULT
Problem No. 2 The following information is available for Ram Co. for the current year:

Standard:
Material X: 3.0 pounds per unit @ $4.20 per pound
Material Y: 4.5 pounds per unit @ $3.30 per pound
Class S labor: 3 hours per unit @ $10.50 per hour
Class US labor: 7 hours per unit @ $8.00 per hour

Actual:
Material X: 3.6 pounds per unit @ $4.00 per pound (purchased and used)
Material Y: 4.4 pounds per unit @ $3.25 per pound (purchased and used)
Class S labor: 3.8 hours per unit @ $10.60 per hour
Class US labor: 5.7 hours per unit @ $7.80 per hour
Raxco produced a total of 45,750 units.

Requirement:
1. Compute the material price, mix, and yield variances (round to the nearest dollar).

ANSWER:
Standard: X 3.0/7.5 = 40%
Y 4.5/7.5 = 60%

Actual:
X 3.6 × 45,750 × $4.00 = $ 658,800
Y 4.4 × 45,750 × $3.25 = 654,225
$1,313,025
$43,005 F price
Actual × Standard Prices:
X 3.6 × 45,750 × $4.20 = $ 691,740
Y 4.4 × 45,750 × $3.30 = 664,290
$1,356,030
$16,470 U mix

Standard Qty. × Actual Mix × Standard Prices:


X 40% × 366,000* × $4.20 = $ 614,880
Y 60% × 366,000 × $3.30 = 724,680
$1,339,560 $83,722 U yield

Standard x Standard:
X 40% × 343,125** × $4.20 = $ 576,450
Y 60% × 343,125 × $3.30 = 679,388
$1,255,838

*(45,750 × 8 = 366,000)
**(45,750 × 7.5 = 343,125)
2. Compute the labor rate, mix, and yield variances (round to the nearest dollar).

ANSWER: Standard: S 3/10 = 30% Actual: S 3.8/9.5 = 40%


US 7/10 = 70% US 5.7/9.5 = 60%

Actual × Actual Prices:


S 3.8 × 45,750 × $10.60 = $1,842,810
US 5.7 × 45,750 × $7.80 = 2,034,045
$3,876,855
$34,770 F rate
Actual × Standard Prices:
S 3.8 × 45,750 × $10.50 = $1,825,425
US 5.7 × 45,750 × $ 8.00 = 2,086,200
$3,911,625
$108,656 U mix

Standard Qty. × Actual Mix × Standard Prices:


S 30% × 434,625* × $10.50 = $1,369,069
US 70% × 434,625 × $ 8.00 = 2,433,900
$3,802,969
$200,156 F yield

Standard × Standard:
S 30% × 457,500** × $10.50 = $1,441,125
US 70% × 457,500 × $ 8.00 = 2,562,000
$4,003,125

*(45,750 × 9.5 = 434,625)


**(45,750 × 10 = 457,500)

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