Question : Exercises Ex 201 Sonic, Inc. planning to produce 2,500 units of product : 1311914

 

Exercises

Ex 201

Sonic, Inc. is planning to produce 2,500 units of product in 2013. Each unit requires 3 pounds of materials at $6 per pound and a half hour of labor at $16 per hour. The overhead rate is 75% of direct labor.

 

Instructions

(a)Compute the budgeted amounts for 2013 for direct materials to be used, direct labor, and applied overhead.

(b)Compute the standard cost of one unit of product.

 

Ex. 202

Pane Corp. manufactures and sells a nutrition drink for children. It wants to develop a standard cost per gallon. The following are required for production of a 100 gallon batch:

1,960 ounces of lime Kool-Drink at $.12 per ounce

40 pounds of granulated sugar at $.60 per pound

63 kiwi fruit at $.50 each

100 protein tablets at $.90 each

4,000 ounces of water at $.003 per ounce

 

Pane estimates that 2% of the lime Kool-Drink is wasted, 20% of the sugar is lost, and 10% of the kiwis cannot be used.

 

Instructions

Compute the standard cost of the ingredients for one gallon of the nutrition drink.

 

Ex. 203

Engines Done Right Co. is trying to establish the standard labor cost of a typical engine tune-up. The following data have been collected from time and motion studies conducted over the past month.

Actual time spent on the tune-up1.0 hour

Hourly wage rate$16

Payroll taxes10% of wage rate

Setup and downtime10% of actual labor time

Cleanup and rest periods20% of actual labor time

Fringe benefits25% of wage rate

 

Instructions

(a)Determine the standard direct labor hours per tune-up

(b)Determine the standard direct labor hourly rate.

(c)Determine the standard direct labor cost per tune-up.

(d)If a tune-up took 1.5 hours at the standard hourly rate, what was the direct labor quantity variance?

 

Ex. 204

Riggins, Inc. manufactures one product called tybos. The company uses a standard cost system and sells each tybo for $8. At the start of monthly production, Riggins estimated 9,500 tybos would be produced in March. Riggins has established the following material and labor standards to produce one tybo:

 

Standard QuantityStandard Price

Direct materials2.5 pounds$3 per pound

Direct labor0.6 hours$10 per hour

 

During March 2013, the following activity was recorded by the company relating to the production of tybos:

 

1.The company produced 9,000 units during the month.

2.A total of 24,000 pounds of materials were purchased at a cost of $66,000.

3.A total of 24,000 pounds of materials were used in production.

4.5,000 hours of labor were incurred during the month at a total wage cost of $55,000.

 

Instructions

Calculate the following variances for March for Riggins, Inc.

(a)Materials price variance

(b)Materials quantity variance

(c)Labor price variance

(d)Labor quantity variance

 

Ex. 205

The following direct labor data pertain to the operations of Pearce Corp. for the month of November:

Actual labor rate$12.25 per hr.

Actual hours used18,000

Standard labor rate$12.00 per hr.

Standard hours allowed17,100

Ex. 205(Cont.)

Instructions

Prepare a matrix and calculate the labor variances.

 

 

 

 

 

 

 

 

Price VarianceQuantity Variance

 

 

 

 

 

Total

Labor Variance

 

 

 

 

 

 

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