Standard Costs
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Problem 12-9 "Healing Touch"
? Problem 12-14 "Howard Binding"
? Problem 12-19 "Software Associates"
? Problem 12-22 "Trevino Golf Balls"
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Solution Summary
The solution explains four probles relating to standard costs - Problem 12-9 "Healing Touch", Problem 12-14 "Howard Binding", Problem 12-19 "Software Associates" and Problem 12-22 "Trevino Golf Balls"
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P12-9 Healing touch
a.
Material variances
The material price variance is calculated as (Actual Price - Standard Price) Actual Quantity
The price variances for
Metal tubing
Actual Price = 9,455/3,100=3.05
Price variance= ($3.05-3.00)3100= $155U
Leather
Actual Price = 7,722/1,100 = 7.02
Price Variance = ($7.02-7.00)1100= 22U
Padding
Actual Price = 6,560/1,600=4.10
Price Variance ($4.10-4.00)1600= 160U
The material quantity variance is calculated as (Actual Quantity - Standard Quantity) Standard Price
Metal tubing
Standard Quantity = 500 units X 6 m per unit= 3,000m
Quantity Variance = (3100-3000)$3= $300U
Leather
Standard Quantity = 500 X 2sqm = 1,000 sqm
Quantity variance = (1100-1000)$7= 700U
Padding
Standard Quantity = 500X3 kg = 1,500 kg
Quantity Variance = (1600-1500)$4= 400U
Labor variances
Labor rate variance = (Actual Rate - Standard Rate) Actual hours
Actual rate = 27,270/1,800 = 15.15
=($15.15-15)1800= 270U
Labor efficiency variance = (Actual Hours - Standard Hours) Standard Rate
Standard Hours = 500 X 4 = 2,000 hours
Efficiency variance = (1800-2000)$15= $3000F
b.
The material price variances were all unfavorable indicating that actual price paid was higher than the standard price. The quantity variance was also unfavorable as more material was used in relation to ...
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