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Problem-1
Acme Company’s production budget for August is 17,900 units and includes the following component unit costs: direct materials, $8.00; direct labor. $10.40; variable overhead, $6.00. Budgeted fixed overhead is $36,000. Actual production in August was 18,135 units
Required:
Prepare a flexible budget that would be used to compare against actual production costs for August
Problem-2
Acme Company’s production budget for August is 23,000 units and includes the following component unit costs: direct materials. $9.00; direct labor, $11.00; variable overhead, $5.80 Budgeted fixed overhead is $49,000 Actual production in August was 24,075 units
Actual unit component costs incurred during August include direct materials, $10.00; direct labor, $10.00; variable overhead, $6.80 Actual fixed overhead was $52,200
Required:
Prepare a performance report, including each cost component
Problem-3
Acme Company’s production budget for August is 18,500 units and includes the following component unit costs: direct materials, $9.00; direct labor, $11.00; variable overhead, $5.00. Budgeted fixed overhead is $42,000. Actual production in August was 20,250 units. Actual unit component costs incurred during August include direct materials, $9.20; direct labor, $10.40; variable overhead, $5.50. Actual fixed overhead was $44,500. The standard direct material cost per unit consists of 9 pounds of raw material at $1 per pound. During August, 207,000 pounds of raw material were used that were purchased at $0.90 per pound.
Required:
Calculate the materials price variance and materials usage variance for August.
Problem-4
Acme Company’s production budget for August is 19,400 units and includes the following component unit costs: direct materials, $10.00; direct labor, $12.50; variable overhead, $600 Budgeted fixed overhead is $51,000Actual production in August was 20,928 units Actual unit component costs incurred during August include direct materials, $10.50; direct labor. $12.00; variable overhead, $6.50 Actual fixed overhead was $54,400_ The standard direct labor cost per unit consists of 0.5 hour of labor time at $25 per hour During August, $251,136 of actual labor cost was incurred for 9,810 direct labor hours
Required:
Calculate the labor rate variance and labor efficiency variance for August.
Problem-5
Acme Company’s production budget for August is 17,900 units and includes the following component unit costs: direct materials. $8.0; direct labor, $10.4; variable overhead, $6.0. Budgeted fixed overhead is $36,000. Actual production In August was 18,135 units. Actual unit component costs incurred during August include direct materials, $8.60; direct labor. $9.80: variable overhead, $7.20. Actual fixed overhead was $37,900. The standard variable overhead rate per unit consists of $6.0 per machine hour and each unit is allowed a standard of 1 hour of machine time. During August, $130,572 of actual variable overhead cost was Incurred for 10,088 machine hours.
Required:
Calculate the variable overhead spending variance and the variable overhead efficiency variance
Problem-6
The cost formula for the maintenance department of Rainbow Ltd. is $19,400 per month plus $7.80 per machine hour used by the production department.
Required:
a. Calculate the maintenance cost that would be budgeted for a month in which 6,800 machine hours are planned to be used.
b. Prepare an appropriate performance report for the maintenance department assuming that 7,070 machine hours were actually used in the month of May and that the total maintenance cost incurred was $68.940.
Problem-7
Following is a partially completed performance report for a recent week for direct labor in the binding department of a book publisher:
The original budget is based on the expectation that 9,860 books would be bound; the standard is 17 books per ho4r at a pay rate of $30 per hour. During the week, 10,710 books were actually bound. Employees worked 590 hours at an actual total cost of $17,110.
Required:
a. Calculate the flexed budget amount against which actual performance should be evaluated and then calculate the budget variance.
b. Calculate the direct labor efficiency variance in terms of hours.
c. Calculate the direct labor rate variance
Problem-8
For the stamping department of a manufacturing firm, the standard cost for direct labor is $18 per hour, and the production standard calls for 2,600 stampings per hour. During February, 150 hours were required for actual production of 382,200 stampings. Actual direct labor cost for the stamping department for June was $2,775.
Required:
a. Complete the following performance report for February:
b. Calculate the direct labor efficiency and rate variances for February.
c. Reporting the efficiency and rate variances to the appropriate managers could improve control over the stamping department’s direct labor.
Problem-9
Ackerman’s Garage uses standards to plan and control labor time and expense. The standard time for an engine tune-up is 3.5 hours, and the standard labor rate is $19 per hour. Last week, 25 tune-ups were completed. The labor efficiency variance was 14 hours unfavorable, and the labor rate variance totaled $81 favorable.
Required:
a. Calculate the actual direct labor hourly rate paid for tune-up work last week. (Do not round intermediate calculations. Round your answer to 2 decimal pieces.)
b. Calculate the dollar amount of the labor efficiency variance. (Do not round 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).
c. Less skilled, lower paid workers took longer than standard to get the work done is the most likely explanation for these two variances.
Problem-10
Four Seasons Industries has established direct labor performance standards for its maintenance and repair shop. However, some of the labor records were destroyed during a recent fire. The actual hours worked during August were 3,000, and the total direct labor budget variance was $1,560 unfavorable. The standard labor rate was $19.20 per hour, but recent resignations allowed the firm to hire lower-paid replacement workers for some jobs, and this produced a favorable rate variance of $4,200 for August.
Required:
a. Calculate the actual direct labor rate paid per hour during August. (Do not round intermediate calculations. Round your answer to 1 decimal place.) ·
b. Calculate the dollar amount of the direct labor efficiency variance for August. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance).)
c. Calculate the standard direct labor hours allowed for the actual level of activity during August. (Hint: Use the formula for the quantity variance and solve for the missing information.