Standard cost system | Business & Finance homework help

Problem 10-46

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Pharout Company uses a standard cost system.  Job 822 is for the manufacturing of 500 units of the product P521.  The company’s standards for one unit of product P521 are as follows:





Direct Materials

5 Ounces

$2 per Ounce

Direct Labour

2 Hours

$10 per Hour


The job required 2,800 ounces of raw material costing $5,880.  A unfavourable labour rate variance of $250 and a favourable labour efficiency variance of $100 also were determined for this job.


(a) Determine the direct material price variance for job 822 based on the actual quantity of materials used.

(b) Determine the direct materials quantity variance for job 822 based on the actual quantity of materials used.

(c) Determine the actual quantity of direct labour hours used on job 822.

(d) Determine the actual labor costs incurred for job 822.





Problem 10-47

Each unit of job Y703 has standard requirements of 5 pounds of raw material at a price of $100 per pound and 0.5 hours of direct labour at $12 per hour.  To produce 9,000 units of the product, job Y703 actually required 40,000 pounds of the raw material costing around $97 per pound.  The job used a total of 5,000 direct labour hours costing a total of $60,000.


(a) Determine the material price variance for job Y703.

(b) Determine the material quantity variance for job Y703.

(c) Assume that the materials used on this job were purchased from a new supplier.  Would you recommend continuing with this new supplier? 

      Why or why not?

(d) Determine the direct labour rate variance for job Y703.

(e) Determine the direct labour efficiency variance for job Y703.

 Problem 10-54

Financial budgets: cash inflows Worthington Company makes cash (20% of total sales), credit card (50% of total sales), and account (30% of total sales) sales. Credit card sales are collected in the month following the sale, net a 3% credit card fee. This means that if the sale is $100, the credit card company’s fee is $3, and Worthington receives $97. Account sales are collected as follows: 40% in the first month following the sale, 50% in the second month following the sale, 8% in the third month following the sale, and 2% never collected.

The following table identifies the projected sales for the next year:


Prepare a statement showing the cash expected each month from the collections from these sales.



10-56   Financial budgets: wages and expense budgets Nathaniel’s Motor Shop does major repair work on automobile engines. The major cost in the shop is the wages of the mechanics. The shop employs nine mechanics who are paid $750 each for working a 40-hour week. The workweek consists of five days of eight hours each. Employees actually work seven hours each day because they are given one hour of breaks each day. They are highly skilled and valued by their employer, so these mechanics are paid whether or not there is work available for them to do. They are also paid $30 for every overtime hour or partial overtime hour they work.

The machine shop industry estimates that for every mechanic hour actually worked in a shop like this, the employee consumes about $25 of variable support items, such as lubricants, tool parts, and electricity.

The motor shop estimates that the following work will be available each week during the next 10 weeks:


Develop a weekly budget of mechanic wages and variable support costs.



Problem 10-59 – Master Budget


·      Adams Company is a merchandising firm that sells one product

·      The company estimates it will sell 12,000 units at $60 per unit in December

·      In November, the company prepared the following to prep a budget for December: 


Merchandise Inventory, December 1

2,000 Units

Desired Merchandise Inventory for December 31

3,000 Units

Cost per unit of Merchandise Purchases


Selling and Administrative Expenses


Cash Balance, December 1


November Sales



·      The company estimates that 60% of each month’s sales are collected in the month of sale and 40% is collected in the month after sale

·      $200,000 of selling and admin includes $40,000 of depreciation

·      The company pays half for merchandise purchases in the month it is purchased and pays the remainder in the following month

·      Estimated merchandise purchase in November is $340,000

·      All out-of-pocket expenses are paid for in cash


a)How many units of merchandise will Adams budget to purchase in December?  What is the dollar amount of Adams’ budgeted merchandise for December?


(b) Prepare a budgeted income statement for the month ended December for Adams Company.

(c) Prepare a statement of estimated cash flow for the month ended December for Adams Company.


Problem 10-74


Bakery Extraordinaire sells several types of muffins and scones and also sells carrot bread loaves.  Planned process and sales quantities for February are shown here:


Planned Sales for February




Carrot Bread



















· The actual results for February are:



Actual Sales for February




Carrot Bread




















The owner would like to know how the price change and volume change contributed to the $2,735 difference between planned and actual sales revenue.


(a) Compute the sales variance mix for each product line and explain the meaning of each variance you computed.

(b) Compute the sales quantity variance for each product line and explain the meaning of each variance you computed.

(c) Compute the sales price variance for each product like and explain the meaning of each variable you computed.



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