Cost Accounting Test Problems -
Problem 1 - The following data for the Lewgrow Garden Supplies Company pertains to the production of 2,500 garden spades during March. The spade consists of a wooden handle and a metal forged tool that comes in contact with the ground.
Direct Materials (all materials purchased were used):
Standard cost: $1.00 pr handle and $3.50 per metal tool.
Total Actual cost: $11,350
Materials flexible-budget efficiency variance was $650 unfavorable
Direct Manufacturing Labor:
Standard cost is 5 garden spades per hour at $20.00 per hour
Actual cost per hour was $21.00
Labor efficiency variance was $400 favorable.
Required:
1. What is the standard direct material amount per garden spade?
2. What is the standard cost allowed for all units produced?
3. What is the total direct materials flexible-budget variance?
4. What is the direct material flexible-budget price variance?
5. What is the total actual cost of direct manufacturing labor?
6. What is the labor price variance for direct manufacturing label?
Problem 2 - Tyson Hardware uses a flexible budget to develop planning information for its warehouse operations. For 20x5, the company anticipated that it would have 96,000 sales units for 664 customer shipments. Average storage bin usage for various inventories was estimated to be 200 per day. The costs and cost drivers were determined to be as follows:
Item Fixed Variable Cost driver
Product handling $10,000 $1.25 per 100 units
Storage 3.00 per storage bin
Utilities 1,000 1.50 per 100 units
Shipping clerks 1,000 1.00 per shipment
Supplies 0.50 per shipment
During the year, the warehouse processed 90,000 units for 600 customer shipments. The workers used 225 storage bins on average each day to sort, store, and process goods for shipments. The actual costs for 10x5 were:
Item Actual costs
Product handling $10,900
Storage 465
Utilities 2,020
Shipping clerks 1,400
Supplies 340
Required:
1. Prepare a static budget for 20x5 with static-budget variances
2. Prepare a flexible budget for 20x5 with flexible-budget variances.
Problem 3 - Jael Equipment uses a flexible budget for its indirect manufacturing costs. For 20x5, the company anticipated that it would produce 18,000 units with 3,500 machine-hours and7,200 employees days. The costs and cost drivers were determined to be as follows:
Item Fixed Variable Cost driver
Product handling $30,000 $0.40 per unit
Inspection 8,000 8.00 per 100 unit batch
Utilities 400 4.00 per 100 unit batch
Maintenance 1,000 0.20 per machine hour
Supplies 5.00 per employee day
During the year, the company processed 20,000 units, worked 7,500 employees days, and had 4,000 machine hours. The actual costs for 10x5 were:
Item Actual costs
Product handling $36,000
Inspection 9,000
Utilities 1,600
Maintenance 1,200
Supplies 37,500
Required:
1. Prepare the static budget using the overhead items above and then compute the static-budget variances.
2. Prepare a flexible budget using the overhead items above and then compute the flexible-budget variances.
Problem 4 - Bruster Company sells its products for $66 each. The current production level is 25,000 units, although only 20,000 units are anticipated to be sold.
Unit manufacturing costs are:
Direct materials $12.00
Direct manufacturing labor $18.00
Variable manufacturing costs $ 9.00
Total fixed manufacturing costs $180,000
Marketing expenses $6.00 pr units, plus $60,000 per year
Required:
1. Prepare an income statement using absorption costing
2. Prepare an income statement using variable costing.