Question : Exercises 162.Beale Acid Company produces muriatic acid in ½ gallon containers. : 1302886

Exercises

162.Beale Acid Company produces muriatic acid in ½ gallon containers. Its accounting system uses standard costs. The standards per half gallon can of acid call for 0.70 gallons of material and 2.0 hours of labor. The material needed to produce a 0.5 gallon can of product due to evaporation is 0.70 gallons of material. The standard cost per gallon of material is $5.35. The standard cost per hour for labor is $12.00. Overhead is applied at the rate of $8.95 per can. Expected production is 18,000 cans with fixed overhead per year of $35,100, and variable overhead of $7.00 per half gallon can.

During 2014, 19,000 cans were produced; 15,000 gallons of material were purchased at a cost of $87,750; 14,000 gallons of material were used in production. The cost of direct labor incurred in 2014 was $465,300 based on an average actual wage rate of $11.75 per hour. Actual overhead for 2014 was $170,000. Determine the standard cost of each ½ gallon of muriatic acid.

163.Best Chocolates uses standard costing. During 2014, the company estimated the following standard costs for one of its major products, cocoa bars.

Standard quantityStandard price

Direct materials0.10 pounds$30 per pound

Direct labor0.05 hours$15 per hour

Best purchased 500 pounds of cocoa at a cost of $32 per pound. It produced and sold 5,000 chocolate bars using 490 pounds of cocoa and 250 direct manufacturing labor hours at an average wage of $15.25 per hour. Calculate the material price variance and material quantity variance, and indicate whether each variance is favorable or unfavorable.

164.Reconly Company’s standards for the production of one handbag include 7 hours of direct labor at a cost of $15.00 per hour. Last month, Reconly produced 24,200 handbags. Employees were paid $2,553,600 for working a total of 168,000 hours. Calculate Reconly’s labor rate variance and labor efficiency variance and indicate whether each variance is favorable or unfavorable.

165.Eval Industries employs a standard cost system and uses the following standards for the production of one vase:

Direct materials: 5 pounds @ $3.60/pound

Direct labor: 1¼ hour @ $12.00/hour

Eval budgeted 21,600 vases for May. In addition, it purchased 125,000 pounds of direct material at a total cost of $475,000. The total factory wages for May were $327,600. The company manufactured 22,000 units of product during May using 108,000 pounds of direct material and 28,000 direct labor hours. Estimated fixed manufacturing overhead for May was $54,000. Actual total overhead was $70,000. The variable overhead rate is $0.80 per unit, and the fixed overhead rate is $2.50 per unit. Determine the material price variance and the material quantity variance for May. Indicate whether each variance is favorable or unfavorable.

166.Watson Chemical Company produces a chemical used in dry cleaning. Its accounting system uses standard costs. The standards per half gallon can of chemical call for 0.70 gallons of material and 2.0 hours of labor. The material needed to produce a 0.5 gallon can of product due to evaporation is 0.70 gallons of material. The standard cost per gallon of material is $5.35. The standard cost per hour for labor is $12.00. Overhead is applied at the rate of $8.95 per can. Expected production is 18,000 cans with fixed overhead per year of $35,100, and variable overhead of $7.00 per unit (a half gallon can).

During 2014, 19,000 cans were produced; 15,000 gallons of material were purchased at a cost of $87,750; 14,000 gallons of material were used in production. The cost of direct labor incurred in 2014 was $465,300 based on an average actual wage rate of $11.75 per hour. Actual overhead for 2014 was $170,000. Calculate the material variances.

167.Palm Time Inc. budgeted 6,000 step stools for June under its standard costing system. Each stool is sold for $22. Actual production for June was 6,300 stools. The company uses units of product as the cost driver for overhead. Standards and actual costs follow for June:

Budgeted and StandardActual

Direct materials1.1 linear feet @ $2.40 a foot6,400 feet purchased for $15,040; 6,450 feet used

Direct labor0.10 hours @ $14.00 per hour620 hours @$14.30 per hour

Variable overhead$16,800 total$18,400

Fixed overhead$15.00 per DLH$9,200

Calculate the material price variance, material quantity variance, labor rate variance and labor efficiency variance. Indicate if each of the variances is favorable or unfavorable.