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Variance Analysis

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MAPLE PRODUCTS, LTD.
Direct Materials Price and Quantity Variances for Last Year

Standard quantity of materials per hockey stick:
Direct materials added to work in process
Standard direct materials cost per foot
Standard quantity of direct materials-last year

Actual quantity of materials per hockey stick:
Standard quantity of direct materials
Number of sticks produced
Standard quantity of direct materials per stick

Actual quantity of direct materials-last year (feet)

Standard
Actual Actual Standard Actual Quantity Actual Quantity Quantity
Quantity Price Price @ Actual Price @ Std. Price @ Std. Price

Price Variance
Materials Used
Quantity Variance

Journal Entries:

Account Debit Credit
Raw Materials
Materials Price Variance
Accounts Payable

Work in Process
Materials Quantity Variance
Raw Materials

MAPLE PRODUCTS, LTD.
Labor Rate and Efficiency Variances for Last Year

Variable overhead efficiency variance:
Standard rate
Actual hours
Standard hours
Variable overhead efficiency variance

Labor rate variance
Actual hours
Actual rate
Standard rate
Labor rate variance

Standard
Actual Actual Standard Standard Actual Hours Actual Hours Hours
Hours Rate Hours Rate @ Actual Rate @ Std. Rate @ Std. Rate

Rate Variance
Efficiency Variance
Total Variance

Journal Entries:

Account Debit Credit
Work in Process
Labor Efficiency Variance
Labor Rate Variance
Wages Payable

MAPLE PRODUCTS, LTD.
Variable Overhead Spending and Efficiency Variances for Last Year

Standard
Actual Actual Standard Standard Actual Hours Actual Hours Hours
Hours Rate Hours Rate @ Actual Rate @ Std. Rate @ Std. Rate

Spending Variance
Efficiency Variance
Total Variance

4. State possible causes of each variance that you have computed.

For materials:

For labor:

For variable overhead:

MAPLE PRODUCTS, LTD.
Standard Cost Card

Standard Standard
Quantity Price Standard
or Hours or Rate Cost

Total standard cost

MAPLE PRODUCTS, LTD.

Standard Standard
Quantity Price Standard
Standard cost of one hockey stick: or Hours or Rate Cost
Direct materials (feet) ? $3.00 ?
Direct labor (hours) 2.0 ? ?
Variable manufacturing overhead ? $1.30 ?
Total standard cost $27.00

Units produced and sold last year 8,000

Selected cost data: Debit Credit
Accounts payable-direct material purchased $174,000
Wages payable 79,200
Work in process-direct materials $115,200
Direct labor rate variance 3,300
Variable overhead efficiency variance 650

Direct materials purchased (in feet) 60,000
Actual variable manufacturing overhead
cost for last year $19,800
Actual direct materials usage exceeded
standard per stick (in feet) 0.2

Check figures:
(1a) Materials price variance $6,000 F
(3) Variable overhead spending variance 1,650 F

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MAPLE PRODUCTS, LTD.
Direct Materials Price and Quantity Variances for Last Year

Standard quantity of materials per hockey stick:
Direct materials added to work in process $115,200 Given
Standard direct materials cost per foot $3.00 Given in table
Standard quantity of direct materials-last year 38,400 Calculate
Correct!
Actual quantity of materials per hockey stick:
Standard quantity of direct materials 38,400 From above
Number of sticks produced 8,000 Given
Standard quantity of direct materials per stick 4.8 Calculate
Correct!

Actual quantity of direct materials-last year (feet) 5.00 From above + variance given
Correct!

Purchased Calculate Given Given Calculate Standard
Actual Actual Standard Actual Quantity Actual Quantity Quantity
Quantity Price Price @ Actual Price @ Std. Price @ Std. Price
60,000 $2.90 $3.00 $174,000 $180,000 $115,200 Calculate

Price Variance $6,000 Favorable
Materials Used $120,000 Actual Ft @ Std $
Quantity Variance $4,800 ...

Solution Summary

The solution explains how to calculate the various material, labor and overhead variances for Maple Products.

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