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# Sonic, Inc. is planning to produce 2,500 units of product in 2013. Each unit requires 3 pounds of materials at \$6 per pound and a half hour of labor at \$16 per hour. The overhead rate is 75% of direct labor. Instructions (a) Compute the budgeted amounts for 2013 for direct materials to be used, direct labor, and applied overhead. (b) Compute the standard cost of one unit of product. Ex. 202 Pane Corp. manufactures and sells a nutrition drink for children. It wants to develop a standard cost per gallon. The following are required for production of a 100 gallon batch: 1,960 ounces of lime Kool-Drink at \$.12 per ounce 40 pounds of granulated sugar at \$.60 per pound 63 kiwi fruit at \$.50 each 100 protein tablets at \$.90 each 4,000 ounces of water at \$.003 per ounce Pane estimates that 2% of the lime Kool-Drink is wasted, 20% of the sugar is lost, and 10% of the kiwis cannot be used. Instructions Compute the standard cost of the ingredients for one gallon of the nutrition drink. Ex. 203 Engines Done Right Co. is trying to establish the standard labor cost of a typical engine tune-up. The following data have been collected from time and motion studies conducted over the past month. Actual time spent on the tune-up 1.0 hour Hourly wage rate \$16 Payroll taxes 10% of wage rate Setup and downtime 10% of actual labor time Cleanup and rest periods 20% of actual labor time Fringe benefits 25% of wage rate Instructions (a) Determine the standard direct labor hours per tune-up (b) Determine the standard direct labor hourly rate. (c) Determine the standard direct labor cost per tune-up. (d) If a tune-up took 1.5 hours at the standard hourly rate, what was the direct labor quantity variance? Ex. 204 Riggins, Inc. manufactures one product called tybos. The company uses a standard cost system and sells each tybo for \$8. At the start of monthly production, Riggins estimated 9,500 tybos would be produced in March. Riggins has established the following material and labor standards to produce one tybo: Standard Quantity Standard Price Direct materials 2.5 pounds \$3 per pound Direct labor 0.6 hours \$10 per hour During March 2013, the following activity was recorded by the company relating to the production of tybos: 1. The company produced 9,000 units during the month. 2. A total of 24,000 pounds of materials were purchased at a cost of \$66,000. 3. A total of 24,000 pounds of materials were used in production. 4. 5,000 hours of labor were incurred during the month at a total wage cost of \$55,000. Instructions Calculate the following variances for March for Riggins, Inc. (a) Materials price variance (b) Materials quantity variance (c) Labor price variance (d) Labor quantity variance Ex. 205 The following direct labor data pertain to the operations of Pearce Corp. for the month of November: Actual labor rate \$12.25 per hr. Actual hours used 18,000 Standard labor rate \$12.00 per hr. Standard hours allowed 17,100 Ex. 205 (Cont.) Instructions Prepare a matrix and calculate the labor variances. Price Variance Quantity Variance Total Labor Variance Ex. 206 The following direct materials data pertain to the operations of Wright Co. for the month of December. Standard materials price \$5.00 per pound Actual quantity of materials purchased and used 16,500 pounds Ex. 206 (Cont.) The standard cost card shows that a finished product contains 4 pounds of materials. The 16,500 pounds were purchased in December at a discount of 4% from the standard price. In December, 4,000 units of finished product were manufactured. Instructions Prepare a matrix for materials and calculate the materials variances. Price Variance Quantity Variance Total Materials Variance Ex. 207 Seacoast Company provided the following information about its standard costing system for 2013: Standard Data Actual Data Materials 10 lbs. @ \$4 per lbs. Produced 4,000 units Labor 3 hrs. @ \$21 per hr. Materials purchased 50,000 lbs. for \$215,000 Budgeted production 3,500 units Materials used 41,000 lbs. Labor worked 11,000 hrs. costing \$220,000 Instructions Calculate the labor price variance and the labor quantity variance. Ex. 208 Lumberman Manufacturing provided the following information about its standard costing system for 2013: Standard Data Actual Data Materials 10 lbs. @ \$4 per lbs. Produced 4,000 units Labor 3 hrs. @ \$21 per hr. Materials purchased 50,000 lbs. for \$215,000 Budgeted production 3,500 units Materials used 41,000 lbs. Labor worked 11,000 hrs. costing \$220,000 Instructions Determine the amount of the materials price variance. By how much will the materials price variances differ if the price variance is determined at the time of production? Ex. 209 Shep Corporation estimated it would produce 6,200 buckets, though actual production was 6,000 during August. The standard labor cost is 2 buckets per hour at \$18.00 per hour. Actual cost per hour was \$18.40 with a total labor cost of \$53,360. Instructions Determine the amounts of the labor price and the labor quantity variances for August. Ex. 210 Purvis Manufacturing, which produces a single product, has prepared the following standard cost sheet for one unit of the product. Direct materials (6 pounds at \$2 per pound) \$12 Direct labor (2 hours at \$12 per hour) \$24 During the month of April, the company manufactures 300 units and incurs the following actual costs. Direct materials purchased and used (1,850 pounds) \$4,070 Direct labor (620 hours) \$7,130 Instructions Compute the total, price, and quantity variances for materials and labor.

Sonic, Inc. is planning to produce 2,500 units of product in 2013. Each unit requires
3 pounds of materials at \$6 per pound and a half hour of labor at \$16 per hour. The overhead rate is 75% of direct labor.

Instructions

(a) Compute the budgeted amounts for 2013 for direct materials to be used, direct labor, and applied overhead.

(b) Compute the standard cost of one unit of product.

##### Ex. 202

Pane Corp. manufactures and sells a nutrition drink for children. It wants to develop a standard cost per gallon. The following are required for production of a 100 gallon batch:

1,960 ounces of lime Kool-Drink at \$.12 per ounce

40 pounds of granulated sugar at \$.60 per pound

63 kiwi fruit at \$.50 each

100 protein tablets at \$.90 each

4,000 ounces of water at \$.003 per ounce

Pane estimates that 2% of the lime Kool-Drink is wasted, 20% of the sugar is lost, and 10% of the kiwis cannot be used.

Instructions

Compute the standard cost of the ingredients for one gallon of the nutrition drink.

##### Ex. 203

Engines Done Right Co. is trying to establish the standard labor cost of a typical engine tune-up. The following data have been collected from time and motion studies conducted over the past month.

Actual time spent on the tune-up 1.0 hour

Hourly wage rate \$16

Payroll taxes 10% of wage rate

Setup and downtime 10% of actual labor time

Cleanup and rest periods 20% of actual labor time

Fringe benefits 25% of wage rate

Instructions

(a) Determine the standard direct labor hours per tune-up

(b) Determine the standard direct labor hourly rate.

(c) Determine the standard direct labor cost per tune-up.

(d) If a tune-up took 1.5 hours at the standard hourly rate, what was the direct labor quantity variance?

##### Ex. 204

Riggins, Inc. manufactures one product called tybos. The company uses a standard cost system and sells each tybo for \$8. At the start of monthly production, Riggins estimated 9,500 tybos would be produced in March. Riggins has established the following material and labor standards to produce one tybo:

Standard Quantity Standard Price

Direct materials 2.5 pounds \$3 per pound

Direct labor 0.6 hours \$10 per hour

During March 2013, the following activity was recorded by the company relating to the production of tybos:

1. The company produced 9,000 units during the month.

2. A total of 24,000 pounds of materials were purchased at a cost of \$66,000.

3. A total of 24,000 pounds of materials were used in production.

4. 5,000 hours of labor were incurred during the month at a total wage cost of \$55,000.

Instructions

Calculate the following variances for March for Riggins, Inc.

(a) Materials price variance

(b) Materials quantity variance

(c) Labor price variance

(d) Labor quantity variance

##### Ex. 205

The following direct labor data pertain to the operations of Pearce Corp. for the month of November:

Actual labor rate \$12.25 per hr.

Actual hours used 18,000

Standard labor rate \$12.00 per hr.

Standard hours allowed 17,100

##### Ex. 205 (Cont.)

Instructions

Prepare a matrix and calculate the labor variances.

Price Variance Quantity Variance

Total

Labor Variance

##### Ex. 206

The following direct materials data pertain to the operations of Wright Co. for the month of December.

Standard materials price \$5.00 per pound

Actual quantity of materials purchased and used 16,500 pounds

##### Ex. 206 (Cont.)

The standard cost card shows that a finished product contains 4 pounds of materials. The 16,500 pounds were purchased in December at a discount of 4% from the standard price. In December, 4,000 units of finished product were manufactured.

Instructions

Prepare a matrix for materials and calculate the materials variances.

Price Variance Quantity Variance

Total

Materials Variance

##### Ex. 207

Seacoast Company provided the following information about its standard costing system for 2013:

Standard Data Actual Data

Materials 10 lbs. @ \$4 per lbs. Produced 4,000 units

Labor 3 hrs. @ \$21 per hr. Materials purchased 50,000 lbs. for \$215,000

Budgeted production 3,500 units Materials used 41,000 lbs.

Labor worked 11,000 hrs. costing \$220,000

Instructions

Calculate the labor price variance and the labor quantity variance.

##### Ex. 208

Lumberman Manufacturing provided the following information about its standard costing system for 2013:

Standard Data Actual Data

Materials 10 lbs. @ \$4 per lbs. Produced 4,000 units

Labor 3 hrs. @ \$21 per hr. Materials purchased 50,000 lbs. for \$215,000

Budgeted production 3,500 units Materials used 41,000 lbs.

Labor worked 11,000 hrs. costing \$220,000

Instructions

Determine the amount of the materials price variance. By how much will the materials price variances differ if the price variance is determined at the time of production?

##### Ex. 209

Shep Corporation estimated it would produce 6,200 buckets, though actual production was 6,000 during August. The standard labor cost is 2 buckets per hour at \$18.00 per hour. Actual cost per hour was \$18.40 with a total labor cost of \$53,360.

Instructions

Determine the amounts of the labor price and the labor quantity variances for August.

##### Ex. 210

Purvis Manufacturing, which produces a single product, has prepared the following standard cost sheet for one unit of the product.

Direct materials (6 pounds at \$2 per pound) \$12

Direct labor (2 hours at \$12 per hour) \$24

During the month of April, the company manufactures 300 units and incurs the following actual costs.

Direct materials purchased and used (1,850 pounds) \$4,070

Direct labor (620 hours) \$7,130

Instructions

Compute the total, price, and quantity variances for materials and labor.

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