Comprehensive Problem 5 Part C: Note: This section is a continuation from Parts A and B of the comprehensive problem. Be
Posted: Mon May 30, 2022 7:28 am
Comprehensive Problem 5
Part C:
Note: This section is a continuation from Parts
A and B of the comprehensive problem. Be sure you have completed
Parts A and B before attempting Part C. You may have to refer back
to data presented in Parts A and B as well as use answers from
those parts when completing this section.
Genuine Spice Inc. began operations on January 1 of the current
year. The company produces eight- ounce bottles of hand and body
lotion called Eternal Beauty. The lotion is sold wholesale in
12-bottle cases for $100 per case. There is a selling commission of
$20 per case. The January direct materials, direct labor, and
factory overhead costs are as follows:
Part C—August Variance Analysis
During September of the current year, the controller was asked
to perform variance analyses for August. The January operating data
provided the standard prices, rates, times, and quantities per
case. There were 1,500 actual cases produced during August, which
was 250 more cases than planned at the beginning of the month.
Actual data for August were as follows:
The prices of the materials were different from standard due to
fluctuations in market prices. The standard quantity of materials
used per case was an ideal standard. The Mixing Department used a
higher grade labor classification during the month, thus causing
the actual labor rate to exceed standard. The Filling Department
used a lower grade labor classification during the month, thus
causing the actual labor rate to be less than standard.
Required:
10. Determine and interpret the direct
materials price and quantity variances for the three materials.
Enter the costs in dollars and cents (carried to three decimal
places when required). Enter all amounts as positive numbers.
Enter the standard price to two decimal places.
The fluctuation in
caused the direct material price variances. All the quantity
variances were indicating
.
11. Determine and interpret the direct
labor rate and time variances for the two departments. Do not round
hours. Enter the costs in dollars and cents. Enter all amounts as
positive numbers.
The change in the
caused the labor rate variances. This change
have been responsible for the direct labor time variance.
12. Determine and interpret the factory
overhead controllable variance. Enter all amounts as positive
numbers.
The factory overhead controllable variance was caused by the
variance in
.
13. Determine and interpret the factory
overhead volume variance. When determining the fixed factory
overhead rate, round the factory overhead rate to two decimal
places and the factory overhead volume variance to whole dollars.
Enter all amounts as positive numbers.
The volume variance indicates the cost of
.
14. Why are the standard direct labor and
direct materials costs in the calculations for parts (10) and (11)
based on the actual 1,500-case production volume rather than the
planned 1,375 cases of production used in the budgets for parts (6)
and (7)?
Part C:
Note: This section is a continuation from Parts
A and B of the comprehensive problem. Be sure you have completed
Parts A and B before attempting Part C. You may have to refer back
to data presented in Parts A and B as well as use answers from
those parts when completing this section.
Genuine Spice Inc. began operations on January 1 of the current
year. The company produces eight- ounce bottles of hand and body
lotion called Eternal Beauty. The lotion is sold wholesale in
12-bottle cases for $100 per case. There is a selling commission of
$20 per case. The January direct materials, direct labor, and
factory overhead costs are as follows:
Part C—August Variance Analysis
During September of the current year, the controller was asked
to perform variance analyses for August. The January operating data
provided the standard prices, rates, times, and quantities per
case. There were 1,500 actual cases produced during August, which
was 250 more cases than planned at the beginning of the month.
Actual data for August were as follows:
The prices of the materials were different from standard due to
fluctuations in market prices. The standard quantity of materials
used per case was an ideal standard. The Mixing Department used a
higher grade labor classification during the month, thus causing
the actual labor rate to exceed standard. The Filling Department
used a lower grade labor classification during the month, thus
causing the actual labor rate to be less than standard.
Required:
10. Determine and interpret the direct
materials price and quantity variances for the three materials.
Enter the costs in dollars and cents (carried to three decimal
places when required). Enter all amounts as positive numbers.
Enter the standard price to two decimal places.
The fluctuation in
caused the direct material price variances. All the quantity
variances were indicating
.
11. Determine and interpret the direct
labor rate and time variances for the two departments. Do not round
hours. Enter the costs in dollars and cents. Enter all amounts as
positive numbers.
The change in the
caused the labor rate variances. This change
have been responsible for the direct labor time variance.
12. Determine and interpret the factory
overhead controllable variance. Enter all amounts as positive
numbers.
The factory overhead controllable variance was caused by the
variance in
.
13. Determine and interpret the factory
overhead volume variance. When determining the fixed factory
overhead rate, round the factory overhead rate to two decimal
places and the factory overhead volume variance to whole dollars.
Enter all amounts as positive numbers.
The volume variance indicates the cost of
.
14. Why are the standard direct labor and
direct materials costs in the calculations for parts (10) and (11)
based on the actual 1,500-case production volume rather than the
planned 1,375 cases of production used in the budgets for parts (6)
and (7)?