Author Question: Direct manufacturing labor and direct materials variances, missing data. (CMA, heavily adapted) ... (Read 148 times)

go.lag · **on:** Jul 6, 2018

Direct manufacturing labor and direct materials variances, missing data.

(CMA, heavily adapted) Young Bay Surfboards manufactures fiberglass surfboards. The standard cost of direct materials and direct manufacturing labor is 223 per board. This includes 40 pounds of direct materials, at the budgeted price of 2 per pound, and 10 hours of direct manufacturing labor, at the budgeted rate of 14.30 per hour. Following are additional data for the month of July:

There were no beginning inventories.

Required:
1. Compute direct manufacturing labor variances for July.
2. Compute the actual pounds of direct materials used in production in July.
3. Calculate the actual price per pound of direct materials purchased.
4. Calculate the direct materials price variance.

Question 2

Failure to record the adjusting entry for depreciation will overstate assets on the balance sheet.
Indicate whether the statement is true or false

Athena23 · **Reply #1 on:** Jul 6, 2018

Answer to Question 1

1.
Flexible Budget
(Budgeted Input
Actual Costs Qty. Allowed for
Incurred (Actual Actual Input Qty. Actual Output
Input Qty. Actual Price) Budgeted Price Budgeted Price)
Direct mfg. labor 594,500a 586,300b 786,500c

8,200 U 200,200 F
Price variance Efficiency variance

192,000 F
Flexible-budget variance

a Given (or 41,000 hours 14.50/hour)
b 41,000 hours 14.30/hour = 735,000
c 5,500 units 10 hours/unit 14.30/hour = 786,500

2. The favorable direct materials efficiency variance of 1,700 indicates that fewer pounds of direct materials were actually used than the budgeted quantity allowed for actual output.

=

= 850 pounds

Budgeted pounds allowed for the output achieved = 5,500 40 = 220,000 pounds

Actual pounds of direct materials used = 220,000 850 = 219,150 pounds

3. Actual price paid per pound = 432,000/160,000
= 2.70 per pound

4. Actual Costs Incurred Actual Input
(Actual Input Actual Price) Budgeted Price
432,000a 320,000b

112,000 U
Price variance

a Given
b 160,000 pounds 2/pound = 320,000

Answer to Question 2

T