FUNDAMENTALS OF ACCOUNTING II
Homework Exercises – Chapter 22
SE8
Meanwhile Products uses standard costing. The following information about overhead was generated during August:
Standard variable overhead rate $2.50 per machine hour
Standard fixed overhead rate $3.00 per machine hour
Actual variable overhead costs $60,100
Actual fixed overhead costs $68,800
Budgeted fixed overhead costs $70,000
Standard machine hours per unit produced 2.8
Good units produced 8,000
Actual machine hours 24,200
Compute the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances.
E2A
Flossmor Corporation uses standard costing and is in the process of updating its direct materials and direct labor standards for Product 2B. The following data have been accumulated:
Direct materials: In the previous period, 20,000 units were produced, and 32,000 square yards of direct materials at a cost of $128,000 were used to produce them.
Direct labor: In the previous period, 20,000 units were produced and 58,000 direct labor hours were worked – 34,000 hours on machine H and 24,000 hours on machine K. Machine H operators earned $10 per hour, and machine K operators earned $9 per hour last period. A new labor union contract calls for a 10 percent increase in labor rates for the coming period.
Using this information as the basis for the new standards, compute the direct materials quantity and price standards and the direct labor time and rate standards for each machine for the coming period.
E5A
LIFT Elevator Company manufactures small hydroelectric elevators. One of the direct materials used is heavy-duty carpeting for the floor of the elevator. The direct materials quantity standard for May was 6 square yards per elevator. During May, the purchasing agent purchased this carpeting at $20 per square yard; the standard price for the period was $22. Fifty elevators were completed and sold during the month; the Production Department used an average of 6.5 square yards of carpet per elevator. Calculate the company’s direct materials price and quantity variances for carpeting for May.
P1
Modular houses are Homes, Inc.’s specialty. The company’s best-selling model is a three bedroom, 1,400-square foot house with an impressive front entrance. Last year, the standard costs for the six basic direct materials used in manufacturing the entrance were as follows: wood framing materials, $2,140; deluxe front door, $480; door hardware, $260; exterior siding, $710; electrical materials, $580; and interior finishing materials, $1,520. Three types of direct labor are used to build the entrance: carpenter, 30 hours at $36 per hour; door specialist, 4 hours at $24 per hour; and electrician, 8 hours at $50 per hour. Last year, the company used an overhead rate of 40 percent of total direct materials cost.
This year, the cost of wood framing materials is expected to increase by 20 percent, and a deluxe front door will cost $496. The cost of the door hardware will increase by 10 percent, and the cost of electrical materials will increase by 20 percent. Exterior siding cost should decrease by $15 per unit. The cost of interior finishing materials is expected to remain the same. The carpenter’s wages will increase by $1 per hour, and the door specialist’s wages should remain the same. The electrician’s wages will increase by $0.50 per hour. Finally, the overhead rate will decease to 30 percent of total direct materials cost.
Required:
1. Compute the total standard cost of direct materials per entrance for last year.
2. Using your answer to requirement 1, compute the total standard unit cost per entrance for last year.
3. Compute the total standard unit cost per entrance for this year. (Round to the nearest dollar.)
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