Kelly Clarkson manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May.
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Standard Cost per Unit |
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Actual Cost per Unit |
| Direct materials: |
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| Standard: 1.60 feet at $3.00 per foot |
$ |
4.80 |
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| Actual: 1.55 feet at $3.20 per foot |
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$ |
4.96 |
| Direct labor: |
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| Standard: 1.00 hours at $20.00 per hour |
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20.00 |
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| Actual: 1.05 hours at $19.40 per hour |
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20.37 |
| Variable overhead: |
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| Standard: 1.00 hours at $3.00 per hour |
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3.00 |
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| Actual: 1.05 hours at $2.60 per hour |
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2.73 |
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| Total cost per unit |
$ |
27.80 |
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$ |
28.06 |
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| Excess of actual cost over standard cost per unit |
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$ |
0.26 |
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The production superintendent was pleased when he saw this report and commented: "This $0.26 excess cost is well within the 1 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product."
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Actual production for the month was 14,000 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no beginning or ending inventories of materials.
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| 1. |
Compute the following variances for May: |
| a. |
Materials price and quantity variances. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)
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| Materials price variance |
$ |
(Click to select)NoneFU |
| Materials quantity variance |
$ |
(Click to select)NoneFU |
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| b. |
Labor rate and efficiency variances. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)
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| Labor rate variance |
$ |
(Click to select)NoneFU |
| Labor efficiency variance |
$ |
(Click to select)NoneUF |
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c.
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Variable overhead rate and efficiency variances. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)
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| Variable overhead rate variance |
$ |
(Click to select)UFNone |
| Variable overhead efficiency variance |
$ |
(Click to select)UFNone |
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| 2. |
How much of the $0.26 excess unit cost is traceable to each of the variances computed in (1) above.(Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Round your answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)
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| Materials: |
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| Quantity variance |
$ |
(Click to select)UFNone |
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| Price variance |
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(Click to select)UNoneF |
$ |
(Click to select)FNoneU |
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| Labor: |
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| Efficiency variance |
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(Click to select)NoneFU |
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| Rate variance |
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(Click to select)NoneUF |
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(Click to select)NoneUF |
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| Variable overhead: |
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| Efficiency variance |
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(Click to select)NoneFU |
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| Rate variance |
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(Click to select)UFNone |
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(Click to select)FNoneU |
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| Excess of actual over standard cost per unit |
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$ |
(Click to select)FUNone |
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| 3. |
How much of the $0.26 excess unit cost is traceable to apparent inefficient use of labor time? (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Round your answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)
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| Excess of actual over standard cost per unit |
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$ |
(Click to select)FUNone |
| Less portion attributable to labor inefficiency: |
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| Labor efficiency variance |
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(Click to select)FUNone |
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| Variable overhead efficiency variance |
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(Click to select)FUNone |
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(Click to select)FUNone |
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| Portion due to other variances |
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$ |
(Click to select)FUNone |