10 Jan Midgley Corporation

1.

Hettinger Hospital bases its budgets on patient-visits. The hospital’s static budget for March appears below:

Budgeted number of patient-visits

8,900

Budgeted variable costs:

Supplies (@ $10.00 per patient-visit)

$ 89,000

Laundry (@ $9.70 per patient-visit)

86,330

Total variable cost

175,330

Budgeted fixed costs:

Wages and salaries

99,840

Occupancy costs

107,840

Total fixed cost

207,680

Total cost

$383,010

The total variable cost at the activity level of 9,000 patient-visits per month should be:

$175,330

$207,680

$177,300

$210,010

2.

Epley Corporation makes a product with the following standard costs:

Standard Quantity or Hours

Standard Price or Rate

Direct materials

2.0 pounds

$7.00 per pound

Direct labor

1.3 hours

$11.00 per hour

Variable overhead

1.3 hours

$3.00 per hour

In July the company produced 5,000 units using 10,310 pounds of the direct material and 2,290 direct labor-hours. During the month, the company purchased 10,880 pounds of the direct material at a cost of $76,760. The actual direct labor cost was $38,241 and the actual variable overhead cost was $11,942.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The materials quantity variance for July is:

$460 U

$600 F

$2,170 U

$460 F

3.

Epley Corporation makes a product with the following standard costs:

Standard Quantity or Hours

Standard Price or Rate

Direct materials

9.0 pounds

$8.5 per pound

Direct labor

0.8 hours

$30.00 per hour

Variable overhead

0.8 hours

$14.00 per hour

In July the company produced 3,410 units using 13,640 pounds of the direct material and 2,848 direct labor-hours. During the month, the company purchased 14,400 pounds of the direct material at a cost of $35,100. The actual direct labor cost was $85,030 and the actual variable overhead cost was $38,220.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The labor rate variance for July is:

$410 F

$410 U

$3,190 U

$3,190 F

4.

Pardoe, Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours. The company uses a standard cost system and has established the following standards for one unit of product:

Standard Quantity

Standard Price or Rate

Standard Cost

Direct materials

2.0 pounds

$5.50 per pound

$11.00

Direct labor

0.6 hours

$16 per hour

$9.6

Variable manufacturing overhead

0.6 hours

$3.75 per hour

$2.25

During March, the following activity was recorded by the company:

• The company produced 5,000 units during the month.

• A total of 13,500 pounds of material were purchased at a cost of $37,800.

• There was no beginning inventory of materials on hand to start the month; at the end of the month,

2,700 pounds of material remained in the warehouse.

• During March, 3,200 direct labor-hours were worked at a rate of $16.50 per hour.

• Variable manufacturing overhead costs during March totaled $7,400.

The direct materials purchases variance is computed when the materials are purchased.

The materials price variance for March is:

$36,450 U

$20,800 F

$20,800 U

$36,450 F

5.

Oddo Corporation makes a product with the following standard costs:

Standard Quantity or Hours

Standard Price or Rate

Standard Cost Per Unit

Direct materials

3.0 ounces

$8.10 per ounce

$24.30

Direct labor

0.8 hours

$20.00 per hour

$16.00

Variable overhead

0.8 hours

$8.00 per hour

$6.40

The company reported the following results concerning this product in December.

Originally budgeted output

4,510

units

Actual output

4,310

units

Raw materials used in production

13,200

ounces

Actual direct labor-hours

3,718

hours

Purchases of raw materials

14,990

ounces

Actual price of raw materials

$7.90

per ounce

Actual direct labor rate

$19.40

per hour

Actual variable overhead rate

$8.20

per hour

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The materials quantity variance for December is:

$2,187 U

$2,133 F

$2,187 F

$2,133 U

6.

Oddo Corporation makes a product with the following standard costs:

Standard Quantity or Hours

Standard Price or Rate

Standard Cost Per Unit

Direct materials

3.0 ounces

$13.50 per ounce

$40.50

Direct labor

0.6 hours

$19.50 per hour

$11.70

Variable overhead

0.6 hours

$12.00 per hour

$7.20

The company reported the following results concerning this product in December.

Originally budgeted output

12,400

units

Actual output

12,200

units

Raw materials used in production

35,960

ounces

Actual direct labor-hours

7,520

hours

Purchases of raw materials

37,560

ounces

Actual price of raw materials

13.25

per ounce

Actual direct labor rate

15.70

per hour

Actual variable overhead rate

8.70

per hour

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The materials price variance for December is:

$17,630 U

$17,630 F

$9,390 F

$9,390 U

7.

Oddo Corporation makes a product with the following standard costs:

Standard Quantity or Hours

Standard Price or Rate

Standard Cost Per Unit

Direct materials

4.0 ounces

$7.90 per ounce

$31.60

Direct labor

0.7 hours

$30.00 per hour

$21.00

Variable overhead

0.7 hours

$8.00 per hour

$5.60

The company reported the following results concerning this product in December.

Originally budgeted output

4,490

units

Actual output

4,290

units

Raw materials used in production

17,450

ounces

Actual direct labor-hours

3,293

hours

Purchases of raw materials

19,220

ounces

Actual price of raw materials

$7.70

per ounce

Actual direct labor rate

$19.20

per hour

Actual variable overhead rate

$8.10

per hour

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The variable overhead efficiency variance for December is:

$2,349 U

$2,320 F

$2,320 U

$2,349 F

8.

Midgley Corporation makes a product whose direct labor standards are 0.9 hours per unit and $21 per hour. In April the company produced 7,000 units using 5,800 direct labor-hours. The actual direct labor cost was $121,800.

The labor efficiency variance for April is:

$10,500 U

$10,500 F

$11,500 F

$11,500 U