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Question-1
Krumple Inc. produces aluminum cans. Production of 12-ounce cans has a standard unit quantity of 4.7 ounces of aluminum per can. During the month of April, 450,000 cans were produced using 1,875,000 ounces of aluminum. The actual cost of aluminum was $0.10 per ounce and the standard price was $0.08 per ounce. There are no beginning or ending inventories of aluminum.
Required:
Calculate the total variance for aluminum for the month of April. Enter amount as a positive number and select Favorable or Unfavorable.
Question-2
Krumple Inc. produces aluminum cans. Production of 12-ounce cans has a standard unit quantity of 4.7 ounces of aluminum per can. During the month of April, 450,000 cans were produced using 1,875,000 ounces of aluminum. The actual cost of aluminum was $0.10 per ounce and the standard price was $0.08 per ounce. There are no beginning or ending inventories of aluminum.
Required:
Calculate the materials price and usage variances using the columnar and formula approaches. Enter amounts as positive numbers and select Favorable or Unfavorable.
Question-3
Tico Inc. produces plastic bottles. Each bottle has a standard labor requirement of 0.03 hour. During the month of April, 900,000 bottles were produced using 25,200 labor hours @ $15.00. The standard wage rate is $13.50 per hour.
Required:
Calculate the total variance for production labor for the month of April. Enter amounts as positive numbers and select Favorable or Unfavorable.
Question-4
Tico Inc. produces plastic bottles. Each bottle has a standard labor requirement of 0.03 hour. During the month of April, 900,000 bottles were produced using 25,200 labor hours @ $15.00. The standard wage rate is $13.50 per hour.
Required:
Calculate the labor rate and efficiency variances using the columnar and formula approaches. Enter amounts as positive numbers and select Favorable or Unfavorable.
Question-5
During the last 6 weeks, the actual costs of labor for Solsana Company were as follows:
Week 1 $38,500 Week 4 $45,600
Week 2 $40,000 Week 5 $48,000
Week 3 $42,000 Week 6 $51,000
The standard materials cost for each week was $40,000 with an allowable deviation of ±5,000.
Required:
Plot the actual costs over time against the upper and lower limits. Comment on whether or not there is a need to investigate any of the variances.
Question-6
Cinturon Corporation produces high-quality leather belts. The company’s plant in Boise uses a standard costing system and has set the following standards for materials and labor:
| Leather (3 strips @ $4) | $12.00 |
| Direct labor (0.75 hr. @ $12) | 9.00 |
| Total prime cost | $21.00 |
During the first month of the year, Boise plant produced 92,000 belts. Actual leather purchased was 287,500 strips at $3.60 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 78,200 hours at $12.50 per hour.
Required:
- Compute the costs of leather and direct labor that should be incurred for the production of 92,000 leather belts.
- Compute the total budget variances for materials and labor.
- Would you consider these variances material with a need for investigation?
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