Management Accounting

Assignment No (Standard Costing)

Problem No 1: ( Kyle Company)

(A)
MQV (8,000 – 7,500) × $ 4 $2,000 U

1,500 × 5 lbs = 7,500 lbs

Total Mat Cost variance = MPV + MQV
$ 4850 U = MPV + 2,000 U
MPV = 2,850

MPV = (A. Price - $ 4) × 8,200 = 2,000 U

A. Price = 35,650 ÷ 8,200 = $4.3475

(B)

LEV (825– 750) × $ 10 $750 U

1,500 × 0.5 hours = 750 hours

LRV = (A. Rate - $ 10) × 825 = 165 U

A. Rate = $8,415 ÷ 825 = $ 10.20
Total Labor Cost variance = LRV + LEV
$ 915 U = LRV + 750 U
LRV = $165 U

Problem No 2: ( Sullivan Tuxedo Company)

MPV
Black (1.85 – 1.80) × 2,500 $125 U
White (1.40– 1.50) × 1,200 $120 F

MQV
Black (2,300 – 2,250) × $1.80 $90 U
White (1,200– 1,125) × $1.50 $112.50 U

450×5 = 2,250
450×2.5 =1,125
Black:

Direct material (2,500×$1.80) $4,500

Material Price variance 125
Accounts payable (2,500×$1.85) $4,625

Work in process (2,250 × $1.80) $4,050

Material quantity variance 90
Direct material (2,300×$1.80) $4,140

White:

Direct material (1,200×$1.50) $1,800

Accounts payable (1,200×$1.40) $1,680
Material price variance 120

Work in process (1,125 × $1.50) $1,687.50

Material quantity variance 112.50
Direct material (1,200×$1.50) $1,800
(B)

LRV (9.80 – 9.50) × 960 $288 U

LEV (960 – 900) × $9.50 $570 U

450×2 = 900

Direct labor (960×$9.50) $9,120

LRV 288
Payroll (960 ×9.80) $9,408

Work in process (900 × $9.50) $8,550

LEV 570
Direct labor $9,120

Problem No 3: (Pacific Furniture)

Actual Price = $259,120 ÷ 12,640 = $20.50

Direct Materials
Price Variance = (20.50 – 20) × 12,640 = $6,320 U
Efficiency Variance = (11,850 – 750×16) × $20 = $3,000 F
Direct Labor
Rate Variance = (31 – 20) × 2,325 Hours = $2,325 U
Usage Variance = (2,325 – 750×3) × $30 = $2,250 U
Problem No 4: (Chemical, Inc.)

Direct Materials
Price Variance = (3.10 – 3) × 100,000 = $10,000 U
Efficiency Variance = (98,073 – 9810×10) × $3 = $81 F

Direct Labor
Rate Variance = (21 – 20) × 4,900 = $4,900 U
Usage Variance = (4,900 – 9810×0.5) × $20 = $100 F

a. Materials (98,100×3) $294,300

MPV 10,000
A/P (100,000×3.10) $310,000

b. WIP (98,100×3) $294,300

Materials(98,073×3) 294,219
MEV 81

c. WIP (9810×0.5) × 20 $98,100

LRV 4,900
Wages/P (4,900×21) 102,900
LUV 100

Problem No 5: (Bovar Company)

1. Standard DL hours allowed for actual output achieved

= 4,000 × 0.5 = 2,000 Hours

2. Actual DL hours worked

LEV = (Actual Hours – Standard Hours) × Standard Price
-2,000 = (Actual Hours – 4,000×0.5) × $20
Actual Hours = 38,000÷20 = 1,900 Hours

3. Actual DL Rate
LRV = (Actual Rate – Standard Rate) × Actual hours
1,900 = (Actual Rate – $20) × 1,900 hours
Actual Rate = 39,900÷1,900 = $21

4. Standard quantity of DM allowed

4,000 × 3 Kg = 12,000 Kg
5. Actual quantity of DM used
MEV = (Actual quantity – Standard quantity) × Standard Price
2,500 = (Actual quantity – 12,000 Kg) × $5
Actual quantity = 62,500÷5 = 12,500 Kg

6. Actual quantity of DM purchased in Kg

MPV = (Actual Price – Standard Price) × DM purchased
3,250 = (Actual Price × DM purchased – Standard Price × DM purchased)
3,250 = (68,250 - $5 × DM purchased)
DM purchased = 65,000÷5 = 13,000 Kg

7. Actual DM price per Kg

= 13,000 Kg × Actual Price = $68,250
Actual Price = $5.25

 Debit variances are unfavorable variance and shows as +

 Credit variances are favorable variance and shows as -

Problem No 6 (O’Shea Company)

Direct Material
MPV = (16.50- 15) × 6,000 = $9,000 U
MEV = (4,400 -4,000) × $15= $6,000 U
Direct Labor
LRV = (12.40- 12) × 3,250 = $1,300 U
LEV = (3,250 -3,000) × $12= $3,000 U

a. Material (6,000×15) 90,000

MPV 9,000
Accounts payable 99,000
b. WIP (4,000×15) 60,000
MEV 6,000
Materials (4,000×16.50) 66,000
c. WIP (3,000×12) 36,000
LRV 1,300
LEV 3,000

Wages payable (3,250×12.40) 40,300

Problem No 7:( Aquafloat)

a). Direct-labor rate variance for November.
LRV = (A. Rate – S. Rate) × A. Hours
= (8.24 -8.20) × 36,500 = $1,460 U
300,760÷36,500 = $8.24
b). Direct-labor efficiency variance for November.
Units completed 5,600 × 6 hours per unit = 33,600 hours
Partial completed 800 × 0.75 × 6 hours = 3,600
37,200
LEV = (A. Hours – S. Hours) × S. Hours
= (36,500 – 37,200) × 4 8.20 = $5,740 F
c). Actual kilograms of material used in the production process during November
Units completed 5,600 × 8 = 44,800 Kg
Partial completed 800 × 8 = 6,400
51,200 Kg
MQV = ( A.Q – S.Q) × S. Rate
1500 = ( A.Q – 51,200) × $5
Actual Quantity = 51,500 Kg
d). Actual price paid per kilogram of direct material in November.
Actual price paid = 249,250 ÷ 50,000 = $ 4.985 per Kg
e). Total amounts of DM and DL cost transferred to FG inventory during November.
DM cost transferred 5,600×$40($5×8) $224,000
DL cost transferred 5,600×$49.20 275,520
$499,520

f). The total amount of DM and DL cost in the ending balance of WIP inventory at the
end of November.

DM 800×$40 = 32,000
DL 800×75%×49.20 = 29,520
61,520
2.
a) DM 250,000
MPV 750
A/P 249,250
MPV = (4.985 – 5) ×50,000 = 750F
b) WIP 256,000 (51,200×5)
MQV 1,500
DM 257,500(51,500×5)
c) WIP 305,040 (37,200×$8.20)
LRV 1,460
LEV 5,740
W/P 300,760
Problem No 8: (Athena Can Company)
MPV = (0.81 – 0.80) × 240,000 = $2,400 U

MQV = (210,000 – (4×50,000)) × 0.80 = $8,000 U

Total = 2,400 U + 8,000 U = $10,400 U

LRV = (16.30 – 16) × 13,000 = $3,900 U

LEV = (13,000 – (0.25×50,000)) × 16 = $8,000 U

Total = 3,900 U + 8,000 U = $11,900 U

2. Prepare journal entries to

 Record the purchase of direct material on account

 Add direct-material and direct labor variances
 Record the direct material and direct labor variances
 Close these variances into CGS.

1. DM (240,000×0.80) 192,000
MPV 2,400
A/P (240,000×0.81) 194,400

2. WIP 160,000
MQV 8,000
DM 168,000

3. WIP 200,000
LRV 3,900
LEV 8,000
Wages payable 211,900

4. CGS 22,300
MPV 2,400
MQV 8,000
LRV 3,900
LEV 8,000