1. The following information pertains to Skandalis Company’s production of one unit of
its manufactured product during the month of June:
Standard quantity of materials 10 pounds
Standard cost per pound $0.75
Standard direct labor hours 0.50
Standard wage rate per hour $10.00
Materials purchased 200,000 pounds
Cost of materials purchased $0.72 per pound
Materials Consumed for manufacture of 10,000 units 112,000 pounds
Actual direct labor hours required for 10,000 units 4,600
Actual direct labor cost per hour $10.20
The materials price variance is recognized when materials are purchased.
a. Compute the materials price and quantity variances.
b. Compute the labor rate and efficiency variances.
c. Indicate whether each of the above variances is favorable or unfavorable
2. Dye and Dye, Attorneys-at-Law, each bill 1,500 hours per year and receive pay of $100,000. Four paralegals work 2,000 hours each for the firm and receive annual pay of $32,500. Overhead of $396,000 is anticipated, of which $204,000 is attorney support and the rest is paralegal support.
Determine the overhead application rate under each of the following circumstances:
a. A simplified cost approach is used based on hours.
b. A simplified cost approach is used based on payroll dollars.
c. An activity-based cost approach is used. Attorney support is based on labor costs,
and paralegal support is based on hours worked
3.The following accounts are maintained by the Riverside Manufacturing Company in its general ledger: Materials, Work in Process, Factory Overhead, and Accounts Payable. The materials account had a debit balance of $40,000 on November 1.
A summary of material transactions for November shows the following transactions:
(1) Materials acquired on account, $62,000
(2) Direct materials issued, $58,500
(3) Direct materials returned to storeroom, $1,200
(4) Indirect materials issued, $3,600
(5) Indirect materials returned to storeroom, $550
(6) Materials on hand were $200 less than the company’s ledger balance.
a. Prepare journal entries to record these transactions.
b. Post the journal entries to T-accounts.
c. Determine the balance of the materials account on November 30.
Answer 4-8 in Two to Four sentence.
4. Under a process cost system, why is it necessary to estimate the stage or degree of completion of work in process at the end of the accounting period?
5. An employee who manufactures goods for her employer earns $12 an hour for regular wages. He’s paid time and a half for all hours worked in excess of 40 hours per week. In a recent week, she worked 50 hours.
a. How much of her gross pay that week was direct labor?
b. How much was indirect labor?
6. A company has $80,000 in fixed costs and makes one product with a selling price of $20 per unit. If variable costs are $10 per unit, what is the break-even sales volume in units?