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Hank Itzek manufactures and sells homemade wine, and he wants to develop a standard cost

per gallon. The following are required for production of a 50-gallon batch.

3,000 ounces of grape concentrate at $0.06 per ounce

54 pounds of granulated sugar at $0.30 per pound

60 lemons at $0.60 each

50 yeast tablets at $0.25 each

50 nutrient tablets at $0.20 each

2,600 ounces of water at $0.005 per ounce

Hank estimates that 4% of the grape concentrate is wasted, 10% of the sugar is lost, and 25%

of the lemons cannot be used.

Instructions

Compute the standard cost of the ingredients for one gallon of wine. (Carry computations to

two decimal places.)

NOTE: Enter a number in cells requesting a value; enter either a number or a form

Ingredient

Amount per

gallon

Standard

Waste

Grape concentrate

Sugar

Value

Value

4%

10%

Lemons

Value

25%

Yeasst

Value

0%

Nutrient

Value

0%

Water

Value

0%

After you have completed the requirements of E25-2, consider this additional question.

1.

Assume the standard waste for grape concentrate, sugar and lemons changed to 5%,

How will these changes impact the standard cost of one gallon of wine?

on batch.

Standard

Usage

Standard

Price

Standard Cost

per Gallon

?

?

$0.06

0.30

?

?

0.60

0.25

0.20

0.005

question.

gallon of wine?

The standard cost of Product B manufactured by MIT Company includes three units of direct m

$5.00 per unit. During June, 29,000 units of direct materials are purchased at a cost of $4.70

29,000 units of direct materials are used to produce 9,500 units of Product B.

Instructions

(a) Compute the total materials variance and the price and quantity variances.

(b) Repeat (a), assuming the purchase price is $5.15 and the quantity purchased and used is

NOTE: Enter a number in cells requesting a value; enter either a number or a form

(a)

(

(

AP

Value

?

)

)

=

minus

(

minus

(

Value

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Value

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X

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minus

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minus

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minus

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Value

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minus

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=

minus

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minus

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(b)

AQ

Value

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X

X

minus

(

(

=

AQ

Value

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X

X

minus

SP

Value

?

)

)

=

minus

(

minus

(

Value

SQ

Value

X

X

After you have completed the requirements of E25-5, consider this additional question.

Assume the purchase price of direct materials changed to $4.80 and the quantity purc

1.

and used also changed to 30,000 units. Recalculate total materials variance and pric

quantity variances.

rchased at a cost of $4.70 per unit, and

Product B.

ty variances.

tity purchased and used is 28,000 units

her a number or a formula in cells with a "?" .

SP

Value

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Value

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Value

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Value

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)

additional question.

$4.80 and the quantity purchased

materials variance and price and

Nona Inc. which produces a single product, has prepared the following standard cost sheet

for one unit of the product.

Direct materials (8 pounds at $2.50 per pound)

Direct labor (3 hours at $12 per hour)

$20

$36

During the month of April, the company manufactures 235 units and incurs the following

actual costs.

Direct materials purchased and used (1,900 pounds)

$5,035

Direct labor (700 hours)

$8,260

Instructions

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

NOTE: Enter a number in cells requesting a value; enter either a number or a form

(a)

(b)

(

AQ

X

AP

(

Value

X

Value

=

?

minus

?

)

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=

minus

minus

Value

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(

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Value

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minus

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minus

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Value

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Value

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=

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Value

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minus

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minus

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After you have completed the requirements of E25-7, consider this additional question.

Assume that the actual quantity and price paid for direct material and labor

1.

changed to the following:

Direct materials purchased and used (2,000 pounds)

Direct labor (720 hours)

Recalculate total variance, price and quantity variances for both direct materials

and labor.

X

X

SP)

Value

)

)

X

X

SP

Value

)

)

X

X

SP

Value

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X

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Value

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X

SR

Value

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X

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dditional question.

material and labor

$6,200

$8,820

Ayala Corporation accumulates the following data relative to jobs started and finished during

Cost and Production Data

Raw materials unit cost

Raw materials units used

Direct labor payroll

Direct labor hours worked

Manufacturing overhead incurred

Manufacturing overhead applied

Machine hours expected to be used at normal capacity

Budgeted fixed overhead for June

Variable overhead rate per machine hour

Fixed overhead rate per machine hour

Actual

$2.25

10,600

$120,960

14,400

$189,500

Overhead is applied on the basis of standard machine hours. Three hours of machine time ar

required for each direct labor hour. The jobs were sold for $400,000. Selling and administrati

expenses were $40,000. Assume that the amount of raw materials purchased equaled the am

used.

Instructions

(a) Compute all of the variances for (1) direct materials and (2) direct labor.

(b) Compute the total overhead variance.

(c) Prepare an income statement for management. (Ignore income taxes.)

NOTE: Enter a number in cells requesting a value; enter either a number or a form

(a)(1)

(

AQ

X

(

Value

X

=

?

minus

AP

Value

?

)

)

=

minus

minus

Value

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minus

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(

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Value

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Value

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minus

minus

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(

(a)(2)

(b)

(c )

minus

Value

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Value

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=

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minus

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minus

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)

)

=

minus

minus

Value

(

(

Value

=

Actual

Overhead

minus

Value

minus

Overhead

Applied

Value

AYALA CORPORATION

Income Statement

For the Month Ended June 30, 2014

Sales revenue

Cost of goods sold (at standard)

Gross profit (at standard)

Variances

Material price

Materials quantity

Labor price

Labor quantity

Overhead

Total variance - favorable

Gross profit (actual)

Value

Value

Value

Value

Value

Net income

After you have completed the requirements of P25-2A, consider this additional question.

1.

Assume that the actual price for raw materials changed to $2.30 and actual quantity o

Recompute total materials variance and price and quantity variances for materials.

2.

Show the impact of the changes above on the income statement.

Standard

$2.10

10,000

$120,000

15,000

$193,500

42,500

$55,250

$3.00

$1.30

Selling and administrative

urchased equaled the amount

SQ

Value

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Value

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Value

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X

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Value

)

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Value

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X

SR

Value

)

)

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Value

X

X

SR

Value

)

)

Value

Value

Value

Value

Value

Value

Value

dditional question.

30 and actual quantity of raw materials used changed to 11,000 units.

riances for materials.

P25-6A Journalize and post standard cost entries, and prepare income statement

Jorgenson Corporation uses standard costs with its job order cost accounting system.

In january, an order (Job No. 12) for 1,900 units of Product B was received. The standard

cost of one unit of Product B is as follows.

Direct materials

Direct labor

Overhead

1 hour at $8.00 per hour

2 hours (variable $4.00 per machine hour;

fixed $2.25 per machine hour)

Standard cost per unit

Normal capacity for the month was 4,200 machine hours. During January, the following

transactions applicable to Job No. 12 occurred.

1. Purchased 6,200 pounds of raw materials on account at $1.05 per pound.

2. Requisitioned 6,200 pounds of raw materials for Job No. 12.

3. Incurred 2,000 hours of direct labor at a rate of $7.80 per hour.

4. Worked 2,000 hours of direct labor on Job No.12.

5. Incurred manufacturing overhead on account $25,000.

6. Applied overhead to Job No. 12 on basis of standard machine hour allowed.

7. Completed Job No. 12.

8. Billed customer for Job No. 12 at a selling price of $65,000.

Instructions

(a) Journalize the transactions.

(b) Post to the job order cost accounts.

(c ) Prepare the entry to recognize the total overhead variance.

(d) Prepare the January 2014 income statement for management. Assume selling and

administrative expenses were $2,000.

NOTE: Enter a number in cells requesting a value; enter either a number or a form

g system.

he standard

$3.00

8.00

12.50

$23.50

he following

selling and

Huang Company uses a standard cost accounting system to account for the manufacture of exhaust fa

In July 2014, its accumulates the following data relative to 1,800 units started and finished.

Cost and Production Data

Raw materials

Units purchased

Units used

Unit cost

Direct labor

Hours worked

Hourly rate

Manufacturing overhead

Incurred

Applied

Actual

Standard

21,000

$21,000

$3.70

$22,000

$3.50

3,450

$11.50

$3,600

$12.00

$94,800

$100,800

Manufacturing overhead was applied on the basis of direct labor hours. Normal capacity for the mont

direct labor hours. At normal capacity, budgeted overhead costs were $16 per labor hour variable and

hour fixed. Total budgeted fixed overhead costs were $40,800.

Jobs finished during the month were sold for $270,000. Selling and administrative expenses were $

Instructions

(a) Compute all of the variances for (1) direct materials and (2) direct labor.

(b) Compute the total overhead variance.

(c) Prepare an income statement for management. (Ignore income taxes.)

NOTE: Enter a number in cells requesting a value; enter either a number or a form

(a)(1)

(

AQ

X

AP

(

Value

X

Value

=

?

minus

?

)

)

=

minus

(

minus

(

Value

SQ

Value

(

AQ

X

AP

(

Value

X

Value

=

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minus

?

)

)

=

minus

(

minus

(

Value

AQ

Value

(

AQ

X

SP

(

Value

X

Value

)

)

minus

minus

SQ

Value

(

(

(a)(2)

(b)

Value

(

AH

X

(

Value

X

=

?

minus

AR

Value

?

)

)

=

minus

(

minus

(

Value

SH

Value

(

AH

X

(

Value

X

=

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minus

AR

Value

?

)

)

=

minus

(

minus

(

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Value

(

AH

X

SR

(

Value

X

Value

=

?

minus

?

)

)

=

minus

(

minus

(

Value

SH

Value

minus

Value

=

(c )

Actual

minus

Overhead

Value

minus

Overhead

Applied

Value

HUANG COMPANY

Income Statement

For the Month Ended July 31, 2014

Sales revenue

Cost of goods sold (at standard)

Gross profit (at standard)

Variances

Material price

Materials quantity

Labor price

Labor quantity

Overhead

Total variance - favorable

Gross profit (actual)

Value

Value

Value

Value

Value

Value

Value

Value

Value

Value

Net income

Value

Value

After you have completed the requirements of P25-2B, consider these additional questions.

1.

Assume that the actual quantity and rate for labor changed to 3,600 hours and $11

Recompute total labor variance and price and quantity variances for labor.

2.

Show the impact of the changes above on the income statement.

and finished.

labor hour variable and $12 per labor

X

X

SP)

Value

)

)

X

X

SP

Value

)

)

X

X

SP

Value

)

)

X

X

SR

Value

)

)

X

X

SR

Value

)

)

X

X

SR

Value

)

)

dditional questions.

3,600 hours and $11.75 per hour.

ces for labor.

P25-6B Journalize and post standard cost entries, and prepare income statement

Frio Company uses standard costs with its job order cost accounting system.

In January, an order (Job No. 84) was received for 5,500 units of Product D . The standard

cost of one unit of Product D is as follows.

Direct materials

Direct labor

Overhead

Standard cost per unit

1 hour at $9.00 per hour

1 hour (variable $7.40; fixed $8.00

Overhead is applied on the basis of direct labor hours. Normal capacity for the month

of January was 6,000 direct labor hours. During January, the following transactions

applicable to Job No, 48 occurred.

1. Purchased 8,100 pounds of raw materials on account at $3.70 per pound.

2. Requisitioned 8,100 pounds of raw materials for production.

3. Incurred 5,200 hours of direct labor at a rate of $9.20 per hour.

4. Worked 5,200 hours of direct labor on Job No.84.

5. Incurred $87,500 of manufacturing overhead on account.

6. Applied overhead to Job No. 84 on basis of direct labor hours.

7. Transferred Job NO. 84 to finished goods.

8. Billed customer for Job No. 84 at a selling price of $270,000.

Instructions

(a) Journalize the transactions.

(b) Post to the job order cost accounts.

(c ) Prepare the entry to recognize the total overhead variance.

(d) Prepare the January 2014 income statement for management. Assume selling and

administrative expenses were $60,000.

NOTE: Enter a number in cells requesting a value; enter either a number or a form

(a)(1)

Account

Account

Account

(a)(2)

Account

Account

Account

(a)(3)

Account

Account

Account

(a)(4)

Account

Account

Account

(a)(5)

Account

Account

(a)(6)

Account

Account

(a)(7)

Account

Account

(a)(8)

Account

Account

Account

Account

(b)

Value

Value

Value

Factory Labor

Value

Value

Manufacturing Overhead

Value

Value

(c )

Account

Account

(d)

FRIO COMPANY

Income Statement

For the Month Ended January 31, 2014

Sales revenue

Cost of goods sold (at standard)

Gross profit (at standard)

Variances

Material price

Materials quantity

Labor price

Labor quantity

Overhead

Total variance - favorable

Gross profit (actual)

Selling and administrative expenses

Net income

Value

Value

Value

Value

Value

After you have completed the requirements of P25-6B, consider this additional question.

1.

Assume that the actual purchase priceof direct material changed to $3.90 per pound and

actual direct labor rate changed to $9.50 per hour. Revise the journal entries as approoriat

and show changes on the job cost T-accounts.

statement

t D . The standard

0 per pound

$6.00

9.00

15.40

$30.40

ransactions

a number or a formula in cells with a "?" .

Value

Value

Value

Value

Value

Value

Value

Value

Value

Value

Value

Value

Value

Value

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Value

Value

Value

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Value

Value

Value

Value

Value

Value

Value

Value

Value

Value

014

Value

Value

Value

Value

Value

Value

Value

ditional question.

nal entries as approoriate

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