Question

Managerial Accounting Chapter 22 Homework Short Answer 1. What is a variance? 2. What are the basic objectives in the use of standard costs? 3. What are some possible causes of a material price variance? 4. What are some possible causes of a material quantity variance? 5. What are some possible causes of a direct labor rate variance? 6. What are some possible causes of a direct labor time variance? 7. What causes a favorable variance? Exercises 1. Roanoke Company produces chocolate bars. The primary materials used in producing chocolate bars are cocoa, sugar, and milk. The standard costs for a batch of chocolate (5,200 bars) are as follows: Ingredient Quantity Price Cocoa Sugar Milk 400 lbs. 80 lbs. 120 gal. $1.20 per lb. $.50 per lb. $2.50 per gal. Determine the standard direct materials cost per bar of chocolate. 2. Silicone Engine Inc. produces wrist-worn tablet computers. The company uses Thin Film Crystal (TFC) LCD displays for its products. Each tablet uses one display. The company produced 580 tablets during December. However, due to LCD defects, the company actually used 600 LCD displays during December. Each display has a standard cost of $15.00. Six hundred LCD displays were purchased for December production at a cost of $8,550. For December determine the a. price variance, b. quantity variance, and C. total direct materials cost variance. 3. La Batre Bicycle Company manufactures commuter bicycles from recycled materials. The following data for July of the current year are available: Category Quantity of direct labor used Actual rate for direct labor Bicycles completed in April Standard direct labor per bicycle Standard rate for direct labor Amount 5,050 hrs. $16.75 per hr. 1,000 bicycles 5.4 hrs. $16.00 per hr. Determine the a. i. direct labor rate variance, ii. direct labor time variance, iii. total direct labor cost variance. b. How much direct labor should be debited to Work in Process? 4. H.J. Heinz Company uses standards to control its materials costs. Assume that a batch of ketchup (3,128 pounds) has the following standards: Ingredient Standard Quantity Standard Price Whole tomatoes 4,000 lbs. $.65 per lb. Vinegar 270 gal. 2.25 per gal. Corn syrup 25 gal. 28.00 per gal Salt 100 lbs. 2.25 per lb. The actual materials in a batch may vary from the standard due to tomato characteristics. Assume that the actual quantities of materials for batch K-111 were as follows: Actual Quantity 4,275 lbs. of tomatoes 275 gal. of vinegar 20 gal. of corn syrup 90 lbs. of salt a. Determine the standard unit materials cost per pound for a standard batch. b. Determine the direct materials quantity variance for batch K-111. Round your answer to the nearest cent.

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