Case 1. Beshies Corp.

(1) Raw Materials 180,000

Materials Purchase Variance 4,800
Accounts Payable 175,200
To record purchase of materials at standard cost

(2) Work-in-process 156,000

Materials Usage Variance 2,000
Raw Materials 154,000
To record usage of materials at standard cost

(3) Work-in-process 287,500

Labor Rate Variance 1,500
Labor Efficiency Variance 1,000
Payroll 288,000
To record payroll at standard cost
(4) Work-in-process 509,500
FOH Controllable Variance 5,900
FOH Volume Variance 3,400
FOH Control 512,000
To apply FOH to production at standard cost

Case 2. MSD Co.

ANSWER:
a. actual material cost $314,000
actual pieces at standard cost (80,000 × $4) 320,000
material purchase price variance $ 6,000 F
b. 3,900 units × 20 pieces per unit = 78,000 standard quantity allowed
c. total standard cost of material (78,000 × $4) $312,000
d. standard cost of actual material used
$312,000 + $6,400 U quantity variance $318,400
$318,400  $4 = 79,600 actual pieces used
e. actual labor cost $40,120
5,900 actual DLHs × $6 35,400
labor rate variance $ 4,720 U
f. 3,900 units × 1.5 standard hours per unit 5,850 SHA
g. 5,850 SHA × $6 $35,100
h. actual hours × standard rate (from e) $35,400
standard cost of labor allowed (from g) 35,100
labor efficiency variance $ 300 U
i. actual machine hours × standard VOH rate (18,900 × $2.50) $47,250
VOH spending variance 50 U
actual VOH $47,300
 j. 3,900 units × 4.8 standard hours per unit = 18,720 MH allowed
k. standard hours allowed (from j) × standard VOH rate
(18,720 × $2.50) $46,800
actual machine hours × standard rate (from i)
(18,900 × $2.50) 47,250
variable overhead efficiency variance $ 450 U
l. 19,000 machine hours × $3 $57,000
m. 3,900 units × 4.8 hours per unit × $3.00 $56,160
n. actual fixed overhead $60,000
budgeted fixed overhead (from l) 57,000
fixed overhead spending variance $ 3,000 U
o. budgeted fixed overhead (from l) $57,000
applied fixed overhead (from m) 56,160
volume variance $ 840 U
p. total actual overhead $107,300
[$60,000 + $47,300 (from i)]
total applied overhead (18,720 SHA × $5.50) 102,960
Total overhead variance $ 4,340 U

Case 2. BMP Co.

ANSWER:

a. $3 × 10,000 × 12 = $360,000

b. $6,000/$3 = 2,000 under 10,000 – 2,000 = 8,000 units

c. DM = 8,000 × $10 = $80,000, DL = 8,000 × $3 = $24000,

MOH = 8,000 × $5 = $40,000

d. STD Q = 40,000 (X – 40,000) × $2 = $4,000 unf, X = 42,000 pieces issued

e. $24,000 + $800 + $300 = $25,100

f. $40,000 + $6,000 + $1,000 = $47,000

. A firm producing one product has a budgeted overhead of $100,000, of which $20,000 is
variable. The budgeted direct labor is 10,000 hours.

Required: Fill in the blanks.

a. Volume
 Production Flexible Budget Applied Variance

120% ____________ ____________ ____________

100% ____________ ____________ ____________

80% ____________ ____________ ____________

60% ____________ ____________ ____________

b. What is the budget variance at the 80 percent level if the actual overhead incurred
is $87,000?

ANSWER:

TOTAL COST EQUATION = $80,000 FIX + 20,000 ($2) variable

10,000 per unit

a. A = $80,000 + (12,000 × $2) = $104,000

B = $80,000 + (10,000 × $2) = $100,000
C = $80,000 + ( 8,000 × $2) = $ 96,000
D = $80,000 + ( 6,000 × $2) = $ 92,000

APPLICATION RATE = $100,000

10,000 UNITS = $10/unit

b. BUDGET VARIANCE = ACTUAL FOH – BUDGETED FOH

$9,000 FAV = $87,000 – $96,000

Case 3. JVC Co.

ANSWER:

1. App rate = $6/DLH

TOHC = $50,000 + $1/DLH
Std O (A) 5,000 × 2 = 10,000
(B) 5,000 × 4 = 20,000
Std Hrs. 5,000 × 2 = 10,000

2. a. 1. ($7.20 – $7.00) × 12,000 = $2,400 U

2. ($3.90 – $4.00) × 20,000 = 2,000 F
$ 400 U

b. 1. (10,500 – 10,000) × $7.00 = $3,500 U

2. (19,800 – 20,000) × $4.00 = 800 F
$2,700 U
c. $79,380 – (9,800 × $8) = $980 U

d. (9,800 – 10,000) × $8 = $1600 F

e. (10,000 – 10,000) × $5 = 0

f. (9,800 – 10,000) × $1 = $200 F

g. Fix Spd $48,100 – $50,000 = $1,900 F

Var Spd $21,000 – (9,800 × $1) = $11,200 U