Standard Costing and Balanced Scorecard

SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 11-1
(a) Standards are stated as a per unit amount. Thus, the standards are
materials $2.60 ($1,300,000 500,000) and labor $3.40 ($1,700,000
500,000).
(b) Budgets are stated as a total amount. Thus, the budgeted costs for the
year are materials $1,300,000 and labor $1,700,000.
BRIEF EXERCISE 11-2
(a) Standard direct materials price per gallon = $2.60 ($2.30 + $.20 + $.10).
(b) Standard direct materials quantity per gallon = 4 pounds (3.6 + .4).
(c) Standard materials cost per gallon = $10.40 ($2.60 X 4).
BRIEF EXERCISE 11-3
(a) Standard direct labor rate per hour = $15.00 ($13.00 + $.80 + $1.20).
(b) Standard direct labor hours per gallon = 1.5 hours (1.1 + .25 + .15).
(c) Standard labor cost per gallon = $22.50 ($15.00 X 1.5).
BRIEF EXERCISE 11-4
Total materials variance = $1,192 U (3,200 X $5.06*) (3,000** X $5.00).

Materials price variance = $192 U (3,200 X $5.06) (3,200 X $5.00).
Materials quantity variance = $1,000 U (3,200 X $5.00) (3,000 X $5.00).
*$16,192 3,200 **1,500 X 2
BRIEF EXERCISE 11-5
Total labor variance = $680 U (2,100 X $10.80) (2,000 X $11.00).

Labor price variance = $420 F (2,100 X $10.80) (2,100 X $11.00).
Labor quantity variance = $1,100 U (2,100 X $11.00) (2,000 X $11.00).
Copyright 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only) 11-7
BRIEF EXERCISE 11-6
The formula is: Actual Overhead

Overhead Applied = Total Overhead Variance
$118,000 *$122,400* $4,400 F
*20,400 X $6 = $122,400
BRIEF EXERCISE 11-7
1. financial............................................. (c) return on assets

2. customer ........................................... (d) brand recognition
3. internal process.............................. (a) plant capacity utilization
4. learning and growth ...................... (b) employee work days missed due
to injury
*BRIEF EXERCISE 11-8

(a) Raw Materials Inventory..................................................... 12,000
Materials Price Variance............................................ 500
Accounts Payable........................................................ 11,500
(b) Work in Process Inventory (5,800 X $2*) ...................... 11,600

Materials Quantity Variance ..................................... 400
Raw Materials Inventory (5,600 X $2) .................... 11,200
*$12,000 6,000
(a) Factory Labor......................................................................... 25,500

Labor Price Variance .................................................. 1,500
Factory Wages Payable ............................................. 24,000
(b) Work in Process Inventory (3,150 X $8.50*)................. 26,775

Labor Quantity Variance ........................................... 1,275
Factory Labor................................................................ 25,500
*$25,500 3,000
11-8 Copyright 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only)
The formula is: Overhead Overhead

Actual Overhead Budgeted = Controllable Variance
$118,000 *$131,600* $13,600 F
*(20,400 X $4) + $50,000 = $131,600
The formula is:

Fixed Overhead
Overhead X (Normal Capacity Hours Standard Hours Allowed) = Volume
Rate Variance
$2.00*/hr. X (25,000 20,400) = $9,200 U
*($50,000 25,000 hrs.)
SOLUTIONS FOR DO IT! REVIEW EXERCISES
DO IT! 11-1
Manufacturing Cost Standard Standard Standard

X =
Element Quantity Price Cost
Direct materials 2 pounds $ 5.00 $10.00
Direct labor 0.2 hours 15.00 3.00
Manufacturing overhead 0.2 hours 18.75* 3.75
Total $16.75
*125% of direct labor cost
DO IT! 11-2
The variances are:

Total materials variance = (29,000 X $6.30) (32,000* X $6.00) = $9,300 favorable
Materials price variance = (29,000 X $6.30) (29,000 X $6.00) = $8,700 unfavorable
Materials quantity variance = (29,000 X $6.00) (32,000* X $6.00) = $18,000 favorable
*(16,000 X 2)
DO IT! 11-3
The variances are:

Total labor variance = (4,100 X $14.30) (3,800* X $14.00) = $5,430 unfavorable
Labor price variance = (4,100 X $14.30) (4,100 X $14.00) = $1,230 unfavorable
Labor quantity variance = (4,100 X $14.00) (3,800* X $14.00) = $4,200 unfavorable
Total overhead variance = $81,300 $83,600** = $2,300 favorable
*2,000 X 1.9
**3,800 hours X $22.00
DO IT! 11-4
1. Learning and growth perspective.

2. Financial perspective.
3. Customer perspective.
4. Internal process perspective.
5. Learning and growth perspective.
6. Customer perspective.
SOLUTIONS TO EXERCISES
EXERCISE 11-1
(a) Direct materials: (2,000 X 3) X $5 = $30,000

Direct labor: (2,000 X 1/2) X $15 = $15,000
Overhead: $15,000 X 70% = $10,500
(b) Direct materials: 3 X $5 = $15.00

Direct labor: 1/2 X $15 = 7.50
Overhead: $7.50 X 70% = 5.25
Standard cost: $27.75
(c) The advantages of standard costs which are carefully established and
prudently used are:
1. Management planning is facilitated.
2. Greater economy is promoted by making employees more cost-
conscious.
3. Setting selling prices is facilitated.
4. Management control is enhanced by having a basis for evaluation
of cost control.
5. Variances are highlighted in management by exception.
6. Costing of inventories is simplified and clerical costs are reduced.
EXERCISE 11-2
Amount Standard
Per Standard Standard Standard Cost Per
Ingredient Gallon Waste Usage Price Gallon
Grape concentrate 60* oz. 4% (a) 62.5 oz. $.06 $3.75
Sugar (54 50) 1.08 lb. 10% (b) 1.20 lb. .30 .36
Lemons (60 50) 1.2 25% (c) 1.6 .60 .96
Yeast 1 tablet 0% 1 tablet .25 .25
Nutrient 1 tablet 0% 1 tablet .20 .20
Water (2,600 50) 52 oz. 0% 52 oz. .005 .26
$5.78
*3,000 50
(a) .96X = 60 ounces; or X = (60 ounces)/.96.
(b) .90X = 1.08 pounds; or X = (1.08 pounds)/.90.
(c) .75X = 1.2 lemons; or X = (1.2 lemons)/.75.
EXERCISE 11-3
Direct materials
Cost per pound [$5 (2% X $5) + $0.25] $5.15
Pounds per unit (4.5 + 0.5) X 5 $25.75
Direct labor
Cost per hour ($12 + $3) $ 15
Hours per unit (2 + .3) X 2.3 34.50
Manufacturing overhead
2.3 hours X $7 16.10
Total standard cost per unit $76.35
EXERCISE 11-4
(a) Actual service time 1.0 hours

Setup and downtime 0.2 hours
Cleanup and rest periods 0.3 hours
Standard direct labor hours per oil change 1.5 hours
(b) Hourly wage rate $12.00

Payroll taxes ($12 X 10%) 1.20
Fringe benefits ($12 X 25%) 3.00
Standard direct labor hourly rate $16.20
(c) Standard direct labor cost per oil change = 1.50 hours X $16.20 per hour
= $24.30
(d) Direct labor quantity variance = (1.60 hours X $16.20) (1.50 hours X $16.20)
= $25.92 $24.30
= $1.62 U
EXERCISE 11-5
(a) Total materials variance:

( AQ X AP ) ( SQ X SP )
(29,000 X $4.70) (28,500* X $5.00)
$136,300 $142,500 = $6,200 F
*9,500 X 3
Materials price variance:

( AQ X AP ) ( AQ X SP )
(29,000 X $4.70) (29,000 X $5.00)
$136,300 $145,000 = $8,700 F
Materials quantity variance:

( AQ X SP ) ( SQ X SP )
(29,000 X $5.00) (28,500 X $5.00)
$145,000 $142,500 = $2,500 U
(b) Total materials variance:

(28,000 X $5.15) (28,500 X $5.00)
$144,200 $142,500 = $1,700 U

(28,000 X $5.15) (28,000 X $5.00)
$144,200 $140,000 = $4,200 U

(28,000 X $5.00) (28,500 X $5.00)
$140,000 $142,500 = $2,500 F
EXERCISE 11-6
(a) Total labor variance:

( AH X AR ) ( SH X SR )
(40,600 X $12.15) (40,000* X $12.00)
$493,290 $480,000 = $13,290 U
*10,000 X 4
(b) Labor price variance:

( AH X AR ) ( AH X SR )
(40,600 X $12.15) (40,600 X $12.00)
$493,290 $487,200 = $6,090 U
Labor quantity variance:

( AH X SR ) ( SH X SR )
(40,600 X $12.00) (40,000 X $12.00)
$487,200 $480,000 = $7,200 U
(c) Labor price variance:
(40,600 X $12.15) (40,600 X $12.25)
$493,290 $497,350 = $4,060 F

(40,600 X $12.25) (41,000* X $12.25)
$497,350 $502,250 = $4,900 F
*4.1 X 10,000
EXERCISE 11-7
Total materials variance:

(1,900 X $2.65*) (1,880** X $2.50)
$5,035 $4,700 = $335 U

(1,900 X $2.65) (1,900 X $2.50)
$5,035 $4,750 = $285 U
*$5,035 1,900 **235 X 8
EXERCISE 11-7 (Continued)

(1,900 X $2.50) (1,880 X $2.50)
$4,750 $4,700 = $50 U
Total labor variance:

(700 X $11.80*) (705** X $12.00)
$8,260 $8,460 = $200 F
*$8,260 700 **235 X 3
Labor price variance:

(700 X $11.80) (700 X $12.00)
$8,260 $8,400 = $140 F

(700 X $12.00) (705 X $12.00)
$8,400 $8,460 = $60 F
EXERCISE 11-7 (Continued)
(Not Required)
Materials Variance Matrix

(1) (2) (3)
Actual Quantity Actual Quantity Standard Quantity
X Actual Price X Standard Price X Standard Price
1,900 X $2.65 = $5,035 1,900 X $2.50 = $4,750 1,880 X $2.50 = $4,700
Price Variance Quantity Variance

(1) (2) (2) (3)
$5,035 $4,750 = $285 U $4,750 $4,700 = $50 U
Total Variance
(1) (3)
$5,035 $4,700 = $335 U
Labor Variance Matrix

(1) (2) (3)
Actual Hours Actual Hours Standard Hours
X Actual Rate X Standard Rate X Standard Rate
700 X $11.80 = $8,260 700 X $12.00 = $8,400 705 X $12.00 = $8,460
Price Variance Quantity Variance

(1) (2) (2) (3)
$8,260 $8,400 = $140 F $8,400 $8,460 = $60 F
Total Variance
(1) (3)
$8,260 $8,460 = $200 F
EXERCISE 11-8
(1,220 X $128) (1,200 X $130)
$156,160 $156,000 = $160 U

(1,220 X $128) (1,220 X $130)
$156,160 $158,600 = $2,440 F

(1,220 X $130) (1,200 X $130)
$158,600 $156,000 = $2,600 U

(4,150 X $13) (4,300 X $12.50)
$53,950 $53,750 = $200 U

(4,150 X $13) (4,150 X $12.50)
$53,950 $51,875 = $2,075 U

(4,150 X $12.50) (4,300 X $12.50)
$51,875 $53,750 = $1,875 F
(b) The unfavorable materials quantity variance may be caused by the

carelessness or inefficiency of production workers. Alternatively, the
excess quantities may be caused by inferior quality materials acquired
by the purchasing department.
The unfavorable labor price variance may be caused by misallocation
of the work force by the production department. In this case, more
experienced workers may have been assigned to tasks normally done
by inexperienced workers. An unfavorable labor variance may also occur
when workers are paid higher wages than expected. The manager who
authorized the wage increase is responsible for this variance.
EXERCISE 11-9
(a) Number of units = Total standard cost Standard cost per unit
Number of units = $405,000 $20.00 (5 lb X $4 per lb) = 20,250
(b) AQ = [(SQ X SP) Quantity variance] SP

AQ = ($405,000 + $9,000) $4.00 per lb = 103,500 pounds
(c) AP = [(AQ X SP) Price variance] AQ

AP = [(103,500 X $4) $5,175] = $408,825 103,500 lb = $3.95/lb
(d) AH = [(SH X SR) Quantity variance] SR

AH = ($180,000 + $6,000) $10.00/hr = 18,600 hours
(e) AR = [(AH X SR) Price variance] AH

AP = [(18,600 X $10) + $3,840] = $189,840 18,600 hr = $10.21/hr
EXERCISE 11-10
TOBY TOOL & DIE COMPANY

Direct Labor Variance Report
For the Month Ended March 31, 2014
Job Actual Standard Quantity Actual Standard Price
(a)
No. Hours Hours Variance Rate (1) Rate (2) Variance (b) Explanation
A257 221 225 $ 80.00 F $20.00 $20.00 $ 0 Repeat job
A258 450 430 400.00 U $21.00 $20.00 450.00 U Rush job
A259 300 300 ( 0 $20.60 $20.00 180.00 U Replacement
worker
A260 116 110 120.00 U $18.00 $20.00 232.00 F New trainee
Totals $ 440.00 U $398.00 U
(a) (1)
LQV = SR X (AH SH) Actual costs actual hours
(b) (2)
LPV = AH X (AR SR) Standard costs standard hours
EXERCISE 11-11
Total overhead variance:

Actual Overhead Overhead Applied
$263,000 $255,000 = $8,000 U
(51,000 X $5)
EXERCISE 11-12
(a) Overhead Budget Direct Labor Hours Predetermined

=
(at normal capacity) (at normal capacity) Overhead Rate
Variable $250,000 100,000 $2.50
Fixed 600,000 100,000 $6.00
(b) Standard Hours Predetermined Overhead

X =
Allowed Overhead Rate Applied
95,000 $8.50 $807,500
(c) Total Overhead

Actual Overhead Overhead Applied = Variance
$856,000 $807,500 = $48,500 U
($256,000 + $600,000) (95,000 X $8.50)
EXERCISE 11-13
(a) (AQ X AP) ( SQ X SP) = Total Materials Variance

( $10,800) (2,140* X $5) = $100 U
(AQ X AP) ( AQ X SP) = Materials Price Variance

( $10,800) (2,400 X $5) = $1,200 F
( AQ X SP) ( SQ X SP) = Materials Quantity Variance

(2,400 X $5) (2,140* X $5) = $1,300 U
*1,070 X 2
(b) One possible cause of an unfavorable materials quantity variance is

the purchase of substandard materials. Such materials would normally
be purchased at a lower price than normal, which means there would
also be favorable materials price variance. Substandard materials could
also cause work slowdowns and delays, causing an unfavorable labor
quantity variance. Therefore, the purchase of substandard materials could
cause all three variances mentioned.
EXERCISE 11-14
(a)
PICARD LANDSCAPING
Variance Report Purchasing Department
For the Current Month
Actual (1) (2)
Pounds Actual Standard Price
Project Purchased Price Price Variance (a) Explanation
Remington 500 $2.40 $2.50 $50 F Purchased poor-quality seeds
Chang 400 2.30 2.50 80 F Seeds on sale
Wyco 550 2.60 2.50 55 U Price increased
Total price variance $75 F
(a) (1) (2)

MPV = AQ X (AP SP) Actual costs actual quantity Standard costs standard quantity.
(b)
PICARD LANDSCAPING
Variance Report Production Department
For the Current Month
Actual Standard Standard Quantity
Project Pounds Pounds Price Variance (b) Explanation
Remington 500 460 $2.50 $100 U Purchased poor-quality seeds
Chang 400 410 2.50 25 F Purchased higher-quality seeds
Wyco 550 480 2.50 175 U New employee
Total quantity variance $250 U
(b)
MQV = SP X (AQ SQ)
EXERCISE 11-15
BURTE CORPORATION
Variance Report Purchasing Department
For Week Ended January 9, 2014
Type of Quantity Actual Standard Price
Materials Purchased Price Price Variance Explanation
Rogue 11 25,000 lbs. $5.20 $5.00 $5,000 U Price increase
Storm 17 7,000 oz. $3.45 $3.30 $1,050 U Rush order
Beast 29 22,000 units. $0.40 $0.42 $ 440 F Bought larger quantity
25,000 = $5,000/($5.20 $5.00).

$5,000 U because the actual price ($5.20) exceeds the standard price ($5.00).
$1,050/7,000 = $0.15; $3.30 + $0.15 = $3.45
$440/22,000 = $0.02; $0.40 + $0.02 = $0.42
EXERCISE 11-16
FISK COMPANY
Income Statement
For the Month Ended January 31, 2014
Sales revenue (8,000 X $8) ..................................................... $64,000

Cost of goods sold (8,000 X $5) ........................................... 40,000
Gross profit (at standard)....................................................... 24,000
Variances
Materials price................................................................... $1,200 U
Materials quantity............................................................. 800 F
Labor price ......................................................................... 550 U
Labor quantity ................................................................... 750 U
Overhead............................................................................. 800 U
Total varianceunfavorable ............................... 2,500
Gross profit (actual) ................................................................. 21,500
Selling and administrative expenses ................................. 8,000
Net income .................................................................................. $13,500
EXERCISE 11-17
1. Balanced scorecard(c) An approach that incorporates financial and

nonfinancial measures in an integrated system that links performance
measurement and a companys strategic goals.
2. Variance(a) The difference between total actual costs and total stan-
dard costs.
3. Learning and growth perspective(d) A viewpoint employed in the

balanced scorecard to evaluate how well a company develops and retains
its employees.
4. Nonfinancial measures (e) An evaluation tool that is not based on dollars.
5. Customer perspective(f) A viewpoint employed in the balanced

scorecard to evaluate the company from the perspective of those people
who buy its products or services.
6. Internal process perspective(h) A viewpoint employed in the bal-

anced scorecard to evaluate the efficiency and effectiveness of the
companys value chain.
7. Ideal standards(g) An optimum level of performance under perfect oper-

ating conditions.
8. Normal standards(b) An efficient level of performance that is attainable

under expected operating conditions.
*EXERCISE 11-18
1. Raw Materials Inventory (18,000 X $4.40).................... 79,200

Materials Price Variance (18,000 X $.10)...................... 1,800
Accounts Payable (18,000 X $4.50)....................... 81,000
2. Work in Process Inventory (17,500 X $4.40) ............... 77,000

Materials Quantity Variance (500 X $4.40)................... 2,200
Raw Materials Inventory (18,000 X $4.40)........... 79,200
3. Factory Labor (15,300 X $5.50)........................................ 84,150

Labor Price Variance (15,300 X $.50) ................... 7,650
Factory Wages Payable (15,300 X $5.00) ............ 76,500
*EXERCISE 11-18 (Continued)
4. Work in Process Inventory (15,400 X $5.50)............... 84,700

Labor Quantity Variance (100 X $5.50)................ 550
Factory Labor (15,300 X $5.50) .............................. 84,150
5. Work in Process Inventory ($84,700 X 100%) ............ 84,700

Manufacturing Overhead ......................................... 84,700
*EXERCISE 11-19
(a) $126,000 ($128,000 $2,000).

(b) $129,000 ($126,000 + $3,000).
(c) $138,500 ($140,000 $1,500).
(d) $140,900 ($140,000 + $900).
(e) $163,800 ($165,000 $1,200).
*EXERCISE 11-20
Raw Materials Inventory (1,900 X $2.50)................................. 4,750

Materials Price Variance (1,900 X $0.15) ................................ 285
Accounts Payable (1,900 X $2.65) ................................... 5,035
Work in Process Inventory (1,880* X $2.50) .......................... 4,700

Materials Quantity Variance (20 X $2.50)................................ 50
Raw Materials Inventory (1,900 X $2.50)........................ 4,750
*235 X 8
Factory Labor (700 X $12) ........................................................... 8,400

Labor Price Variance (700 X $0.20) ................................. 140
Factory Wages Payable (700 X $11.80) .......................... 8,260
Work in Process Inventory (705* X $12) ................................. 8,460

Labor Quantity Variance (5 X $12)................................... 60
Factory Labor (700 X $12) .................................................. 8,400
*235 X 3
*EXERCISE 11-21
(a) Item Amount Hours Rate

Variable overhead .......................................... $34,650 16,500 $2.10
Fixed overhead................................................ 19,800 16,500 1.20
Total overhead................................................. $54,450 16,500 $3.30
(b) Total overhead variance:

Actual Overhead Overhead Applied
$55,000 $52,800 = $2,200 U
(16,000* X $3.30)
*4,000 X 4 hrs. = 16,000 hrs.
Overhead controllable variance:
Actual Overhead Overhead Budgeted
$55,000 $53,400 = $1,600 U
[(16,000 X $2.10) + $19,800]
Overhead volume variance:
Fixed Overhead Normal Capacity Standard Hours
Rate X Hours Allowed
$1.20 X [(16,500 (4,000 X 4)] = $600 U
(c) The overhead controllable variance is generally associated with variable

overhead costs. Thus, this variance indicates the production managers
inefficiency in controlling variable overhead costs.
The overhead volume variance relates to fixed overhead costs. This
variance indicates whether plant facilities were efficiently used. In this
case 500 (16,500 16,000) hours of plant capacity were not utilized.
*EXERCISE 11-22
(a) 1. Overhead
Overhead Controllable
Total actual overhead cost = Budgeted + Variance
= ($18,000 + $12,600) + $1,200

= $31,800
2. Actual variable overhead cost = Actual Overhead Fixed Overhead

= $31,800 $12,600
= $19,200
3. Variable overhead cost applied = 2,000 hours X $9 = $18,000
4. Fixed overhead cost applied = 2,000 hours X $6 = $12,000
5. Overhead volume variance = Fixed Normal Standard

Overhead X Capacity
y Hours
Rate Hours Allowed
= $6 X (2,100* 2,000)
= $600 U
*$12,600 $6 per hour = 2,100 hours
(b) Number of loans processed = Standard hours allowed

Standard hours per application
= 2,000 2
= 1,000 loans processed
EXERCISE 11-23
(a) (Actual) (Applied) = Total Overhead Variance

($19,000) (1,800 X $10*) = $1,000 U
(Actual) (Budgeted) = Overhead Controllable Variance

($19,000) ($17,600) = $1,400 U
Fixed OH Normal Standard Hours Overhead Volume

Rate X Capacity Allowed = Variance
$3** (1,667*** 1,800) = $400 F
*$200,000/20,000 **($5,000 X 12)/20,000 ***20,000/12
(b) The cause of an unfavorable controllable variance could be higher than

expected use of indirect materials, indirect labor, and factory supplies, or
increases in indirect manufacturing costs, such as fuel and maintenance
costs. A favorable volume variance would be caused by production of
more units than what is considered normal capacity.
SOLUTIONS TO PROBLEMS
PROBLEM 11-1A

(5,100 X $7.20) (4,900 X $7.00)
$36,720 $34,300 = $2,420 U
(5,100 X $7.20) (5,100 X $7.00)
$36,720 $35,700 = $1,020 U
(5,100 X $7.00) (4,900 X $7.00)
$35,700 $34,300 = $1,400 U
(7,500 X $12.50) (7,840* X $12.00)
$93,750 $94,080 = $330 F
*4,900 X 1.6
(7,500 X $12.50) (7,500 X $12.00)
$93,750 $90,000 = $3,750 U
(7,500 X $12.00) (7,840 X $12.00)
$90,000 $94,080 = $4,080 F
Actual Overhead
Overhead Applied
($59,700 + $21,000) (7,840 X $10.00)
$80,700 $78,400 = $2,300 U
PROBLEM 11-2A
(a) 1. Total materials variance:

(10,600 X $2.25) (10,000 X $2.10)
$23,850 $21,000 = $2,850 U
(10,600 X $2.25) (10,600 X $2.10)
$23,850 $22,260 = $1,590 U
(10,600 X $2.10) (10,000 X $2.10)
$22,260 $21,000 = $1,260 U
2. Total labor variance:
(14,400 X $8.40*) (15,000 X $8.00**)
$120,960 $120,000 = $960 U
*$120,960 14,400 **$120,000 15,000
(14,400 X $8.40) (14,400 X $8.00)
$120,960 $115,200 = $5,760 U
(14,400 X $8.00) (15,000 X $8.00)
$115,200 $120,000 = $4,800 F
Actual Overhead
Overhead Applied
$189,500 $193,500 = $4,000 F
(45,000* X $4.30)
*15,000 X 3
PROBLEM 11-2A (Continued)
(c) AYALA CORPORATION

Income Statement
For the Month Ended June 30, 2014
Sales revenue .............................................................. $400,000

Cost of goods sold (at standard) .......................... 334,500*
Gross profit (at standard)........................................ 65,500
Variances
Materials price.................................................... $ 1,590 U
Materials quantity.............................................. 1,260 U
Labor price .......................................................... 5,760 U
Labor quantity .................................................... 4,800 F
Overhead.............................................................. 4,000 F
Total variancefavorable...................... 190
Gross profit (actual) .................................................. 65,690
Selling and administrative expenses .................. 40,000
Net income.................................................................... $ 25,690
*Materials $21,000 + labor $120,000 + overhead applied $193,500.
PROBLEM 11-3A
(a) 1. Total materials variance:

(90,500 X $4.15) (89,600* X $4.40)
$375,575 $394,240 = $18,665 F
*11,200 X 8
(90,500 X $4.15) (90,500 X $4.40)
$375,575 $398,200 = $22,625 F
(90,500 X $4.40) (89,600 X $4.40)
$398,200 $394,240 = $3,960 U
2. Total labor variance:
(14,200 X $14.10) (13,440* X $13.40)
$200,220 $180,096 = $20,124 U
*11,200 X 1.2
(14,200 X $14.10) (14,200 X $13.40)
$200,220 $190,280 = $9,940 U
(14,200 X $13.40) (13,440 X $13.40)
$190,280 $180,096 = $10,184 U
Actual Overhead
Overhead Applied
$86,000 $81,984
($49,000 + $37,000) (13,440* X $6.10**) = $4,016 U
*11,200 X 1.2 **$3.50 + $2.60
PROBLEM 11-3A (Continued)
(c) The materials price variance is more than 4% from standard. The actual
price for materials of $4.15 is $.25 below the standard price of $4.40 or
5.7% ($.25 $4.40). The same result can be obtained by dividing the
total price variance by the total standard price for the quantities purchased
($22,625 $398,200).
The labor price variance is 5.2% from standard ($.70 $13.40). The
same result can be obtained by dividing the total price variance by the
total standard price for the direct labor hours used ($9,940 $190,280).
The labor quantity variance is 5.7% (760 13,440) from standard. The
same result can be obtained by dividing the total quantity variance by
the total standard price for the standard hours allowed ($10,184
$180,096).

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SOLUTIONS TO BRIEF EXERCISES

BRIEF EXERCISE 11-1

BRIEF EXERCISE 11-2

BRIEF EXERCISE 11-3

BRIEF EXERCISE 11-4

Total materials variance = $1,192 U (3,200 X $5.06*) (3,000** X $5.00).

*$16,192 3,200 **1,500 X 2

BRIEF EXERCISE 11-5

Total labor variance = $680 U (2,100 X $10.80) (2,000 X $11.00).

The formula is: Actual Overhead

BRIEF EXERCISE 11-7

1. financial............................................. (c) return on assets

*BRIEF EXERCISE 11-8

(b) Work in Process Inventory (5,800 X $2*) ...................... 11,600

*BRIEF EXERCISE 11-9

(a) Factory Labor......................................................................... 25,500

(b) Work in Process Inventory (3,150 X $8.50*)................. 26,775

The formula is: Overhead Overhead

*(20,400 X $4) + $50,000 = $131,600

*BRIEF EXERCISE 11-11

The formula is:

$2.00*/hr. X (25,000 20,400) = $9,200 U

*($50,000 25,000 hrs.)

SOLUTIONS FOR DO IT! REVIEW EXERCISES

Manufacturing Cost Standard Standard Standard

The variances are:

The variances are:

1. Learning and growth perspective.

(a) Direct materials: (2,000 X 3) X $5 = $30,000

(b) Direct materials: 3 X $5 = $15.00

(a) Actual service time 1.0 hours

(b) Hourly wage rate $12.00

(a) Total materials variance:

Materials price variance:

Materials quantity variance:

(b) Total materials variance:

Materials price variance:

Materials quantity variance:

(a) Total labor variance:

(b) Labor price variance:

Labor quantity variance:

Labor quantity variance:

Total materials variance:

Materials price variance:

Materials quantity variance:

Total labor variance:

*$8,260 700 **235 X 3

Labor price variance:

Labor quantity variance:

Materials Variance Matrix

Price Variance Quantity Variance

Labor Variance Matrix

Price Variance Quantity Variance

Materials price variance:

Materials quantity variance:

Total labor variance:

Labor price variance:

Labor quantity variance:

(b) The unfavorable materials quantity variance may be caused by the

(b) AQ = [(SQ X SP) Quantity variance] SP

(c) AP = [(AQ X SP) Price variance] AQ

(d) AH = [(SH X SR) Quantity variance] SR

(e) AR = [(AH X SR) Price variance] AH

TOBY TOOL & DIE COMPANY

$200,000/20,000 ($5,000 X 12)/20,000 20,000/12