Aliyah Ponton November 7, 2016 Assignment 4-5 ACCT 202 PRINCIPLES OF MANAGERIAL ACCOUNTING PROFESSEOR STEVE MARKOFF HOMEWORK ASSIGNMENT – VARIANCE ANALYSIS   1

Aliyah Ponton

November 7, 2016

Assignment 4-5

ACCT 202 PRINCIPLES OF MANAGERIAL ACCOUNTING

PROFESSEOR STEVE MARKOFF

HOMEWORK ASSIGNMENT – VARIANCE ANALYSIS

1.  OREGON CORPORATION produces chocolate bars.  The primary materials used in production are cocoa, sugar and milk.  The standard costs for a batch of chocolate (5,000 bars) are as follows:

1. What is the standard material cost per batch for each ingredient?
2. In words, what does this mean?
3. What is the standard materials cost per bar?
4. In words, what does this mean?

2.  WASHINGTON FURNITURE COMPANY manufactures antique-style oak furniture and has a standard costing system.  Below are the direct materials, labor and overhead standards for a bedroom set:

1. How much is the expected cost of materials per set?
2. How much is the expected labor cost per set?
3. What is the expected amount of variable overhead per set?
4. What is the expected amount of fixed overhead on a per-set basis?
5. What is the total expected cost per set?
6. What is the term used to describe this cost?
7. If 100 bedroom sets are manufactured, what is the flexible budget amount for materials, labor and overhead (what amount of each would we expect)?

3.  NEW MEXICO TIRES produces ties.  The standard cost card shows the following for direct materials:            Direct materials – 26 lbs. @ $1.85

They produced 2,500 truck tires in August, as follows:

1. What is the “standard input (lbs)” for the month?
2. Complete the following chart:

c) How much did it cost for the materials to produce 2,500 tires?

d) How much should it have cost for the materials to produce 2,500 tires?

e) What was the flexible budget amount for materials at a production level of 2,500 tires?

f) The flexible budget variance for materials is:

g) The materials price variance is:

h) What does this indicate?

i) What might have caused this?  Who would most likely be responsible?

j) The materials usage (quantity) variance is:

11. What does this indicate?

4.  MONTANA CELLULAR produced 5,000 cellular phones in August.  The standard cost record for showed the following amounts for direct labor:

Direct labor:  .742 hrs @ $15/hr.

a. What is the standard input (hours) allowed for the period? 

2. Complete the following chart:

3. How much did it cost for labor to produce 5,000 cellular phones?

4. How much should it have cost for labor to produce 5,000 cellular phones?

5. What was the flexible budget amount for direct labor at a production level of 5,000 cellular phones?

6. The direct labor cost variance is:
7. The direct labor rate variance is:
8. What does this indicate?
1. What might have caused this?
10. The direct labor efficiency variance is:
11. What does this indicate?

50. What might have caused this? Who would most likely be responsible?

5.  UTAH INC. is a manufacturer of bicycles.  Below is production data for the month of May 2010:

1. The amount of direct labor originally budgeted as shown on the static budget at the start of 2010 was:
2. The flexible budget for direct labor for the 280 bikes actually completed is:
3. The direct labor rate variance is:
4. What does this indicate?
5. How might you interpret this?  What could have caused it?  How might we investigate it?
6. The direct labor efficiency variance is:
7. What does this indicate?
8. How might you interpret this?  What could have caused it?  How might we investigate it?