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Folk Exam Questions - Chapter 8 1.

Perpignan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Perpignan has established the following standards for the prime costs of one unit of product: Standard Quantity 12. pounds 2.& hours Standard Price ! ". #pound !22. #hour Standard Cost ! $%. '".2 !1%1.2

Direct materials Direct labor

During (une) Perpignan purchased ** ) pounds of direct material at a total cost of !2)*%*) . +he total factory wages for (une were !1)& ) ) , percent of which were for direct labor. Perpignan manufactured 2') units of product during (une using * 2) pounds of direct material and &%) direct labor hours. -hat is the price variance for the direct material ac.uired by the company during (une/ Solution: 0irst) calculate the actual price per unit of materials as follows: !2)*%*) 1 ** ) lbs. 2 !".1 #lb. +hen calculate the materials price variance as follows: 3aterials price variance 2 4ctual .uantity 5 64ctual price 7 Standard price8 3aterials price variance 2 4Q 5 64P 7 SP8 3aterials price variance 2 ** ) 5 6!".1 7 !". 8 2 !**) 9nfavorable 698 2. Perpignan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Perpignan has established the following standards for the prime costs of one unit of product: Standard Quantity 12. pounds 2.& hours Standard Price ! ". #pound !22. #hour Standard Cost ! $%. '".2 !1%1.2

Direct materials Direct labor

During (une) Perpignan purchased ** ) pounds of direct material at a total cost of !2)*%*) . +he total factory wages for (une were !1)& ) ) , percent of which were for direct labor. Perpignan manufactured 2') units of product during (une using * 2) pounds of direct material and &%) direct labor hours. -hat is the direct material .uantity variance for (une/ Solution:

0irst) calculate the standard .uantity as follows: 2') units 5 12. pounds per unit 2 * ) pounds +hen calculate the material .uantity variance as follows: 3aterials .uantity variance 2 Standard price 5 64ctual .uantity 7 Standard .uantity8 3aterials .uantity variance 2 SP 5 64Q 7 SQ8 3aterials .uantity variance 2 !". 5 6* 2) 7* ) 8 2 !1%) 9nfavorable 698 *. Perpignan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Perpignan has established the following standards for the prime costs of one unit of product: Standard Quantity 12. pounds 2.& hours Standard Price ! ". #pound !22. #hour Standard Cost ! $%. '".2 !1%1.2

Direct materials Direct labor

During (une) Perpignan purchased ** ) pounds of direct material at a total cost of !2)*%*) . +he total factory wages for (une were !1)& ) ), percent of which were for direct labor. Perpignan manufactured 2') units of product during (une using * 2) pounds of direct material and &%) direct labor hours. -hat is the direct labor rate variance for (une/ Solution: 0irst) calculate the actual rate per hour of direct labor as follows: 6!1)& ) 5 ., 8 1 &%) hours 2 !22.' per hour +hen calculate the labor rate price variance as follows: :abor rate variance 2 4ctual hours 5 64ctual rate 7 Standard rate8 :abor rate variance 2 4; 5 64< 7 S<8 :abor rate variance 2 &%) 5 6!22.' 7 !22. 8 2 !*2) 9nfavorable 698 %. Perpignan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Perpignan has established the following standards for the prime costs of one unit of product: Standard Quantity 12. pounds 2.& hours Standard Price ! ". #pound !22. #hour Standard Cost ! $%. '".2 !1%1.2

Direct materials Direct labor

During (une) Perpignan purchased ** ) pounds of direct material at a total cost of !2)*%*) . +he total factory wages for (une were !1)& ) ) , percent of which were for direct labor. Perpignan manufactured 2') units of product during (une

using * 2) pounds of direct material and &%) direct labor efficiency variance for (une/ Solution:

direct labor hours. -hat is the

0irst) calculate the standard hours as follows: 2') units 5 2.& hours per unit 2 &') hours +hen calculate the direct labor efficiency variance as follows: Direct labor efficiency variance 2 Standard rate 5 64ctual hours 7 Standard hours8 Direct labor efficiency variance 2 S< 5 64; 7 S;8 Direct labor efficiency variance 2 !22. 5 6&%) 7 &') 8 2 !22) 0avorable 608