Cost Chapter 15
Cost Chapter 15
Cost Chapter 15
CHAPTER 15
1. c 5. d 9. c
2. a 6. c 10. d
3. a 7. a 11. a
4. b 8. a 12. b
1. b
2. c
3. a
4. d
5. a
6. b
7. b
8. c
9. a
10. b
11. a.
12. a
13. a
14. c
15. d
16. b
17. d
18. d
19. a
April:
Actual factory overhead P140,100
Budgeted overhead:
Fixed (10 x 40% x 15,000) P60,000
4
May:
Actual factory overhead P149,300
Budgeted overhead:
Fixed P60,000
Variable at standard (10 x 60% x 15,000) 90,000 150,000
Overhead controllable variance – favorable P 700
20. c
21. c
The entry to record DM used is to debit WIP at standard prices and standard
quantities (450 units x P9 = P4,050). In this question, all DM variances are
recorded at the time WIP is charged. The materials price variance and the materials
quantity variance must be computed. The project used more units at a higher price
than estimated, so both variances will be unfavorable (debits). The materials quantity
variance is P450 U [(500 – 450) x P9]. The materials price variance is P500 U [500
units x (P10 - P9)]. Materials is credited for the actual prices and actual quantities
(500 x P10 = P5,000).
22. a
The entry to record accrued payroll is to charge WIP at the standard wage rate times
the standard number of hours and to credit accrued payroll for the actual payroll.
The project required mor hours but a lower wage rate than estimated. Hence, the
labor efficiency variance will be unfavorable (a debit); the labor price variance will
be favorable (a credit).
23. d
The entry is to debit applied factory overhead fixed) and credit factory overhead
control (fixed) for their respective balances. The difference is attributable solely to
the production volume variance because the budget (spending) variance is zero
(actual fixed factory overhead = the budgeted amount). The volume variance is
unfavorable because fixed overhead is underapplied. The underapplication (the
unfavorable volume variance debited) is P2,500 [P32,500 budgeted fixed factory
overhead – (2,000 hours x P15 per hour).
24. a
The budget variance is recognized by a debit, given that more was spent for that
activity than was estimated. The entry to record the unfavorable variable overhead
budget variance is to charge the variable overhead volume variance account for the
5
appropriate amount. The variable overhead applied is charged for its balance. The
variable overhead control account is credited for its balance. These entries will result
in a zero balance in both the applied and the control accounts assuming that no
variable overhead efficiency variance existed.
SOLUTIONS TO PROBLEMS
Problem 15-1
1. Material A-1:
Materials Quantity Variance
Standard quantity (9 x 4,000) at standard price (P0.20) P 7,200
Actual quantity (36,250) at standard price (P0.20) 7,250
Materials quantity variance (250 x P0.20) P 50 (U)
Material A-2
Materials Quantity Variance
Standard quantity (9.2 x 4,000) at standard price (P0.30) P11,040
Actual quantity (36,400) at standard price (P9.30) 10,920
Materials quantity variance (400 x P.30) P 120 (F)
Summary:
Materials Quantity Variance Price Variance Total Variance
A-1 P 50 U P145 U P195 U
A-2 120 F 728 F 848 F
Total P 70 F P583 F P653 F
Problem 15-2
Summary:
Labor Labor Efficiency Labor Rate Total
Class Variance Variance Variance
AA P 448 U P 105 F P343 U
BB 120 U 201 F 321 F
Total P 328 U P 306 F P 22 U
Problem 15-3
Summary:
Materials Quantity Variance Price Variance Total
RM-1 P1,200 (U) P8,040 (F) P6,840 (F)
RM-2 720 (F) 1,112 (U) 392 (U)
P 480 (U) P6,928 (F) P6,448 (F)
Problem 15-4
4. Budget Variance
Budgeted overhead:
Variable (15,180 x P4 std variable rate) P60,720
Fixed (P540,000 ÷ 12) 45,000 P105,720
Actual overhead cost 106,852
Overhead budget variance P 1,132 (U)
5. Volume Variance
Standard costs (15,180 x P3.00 fixed std rate) P 45,540
Fixed costs (P540,000 ÷ 12) 45,000
Overhead volume variance P 540 (F)
Problem 15-5
1. Journal entries:
a. Work in Process (standard cost) 899,200
Material price variance 10,144
Material quantity variance 2,944
Materials (actual cost) 906,400
2. Queen Company
Partial Income Statement
Month Ended April 30, 2010
Sales P2,253,680
Cost of goods sold
Cost of goods sold at Std cost P1,538,137
Material price variance 10,144
Labor efficiency variance 320
Overhead budget variance 1,000
Material quantity variance ( 2,944)
Labor rate variance ( 4,020)
Overhead volume variance ( 2,400) 1,540,237
Gross profit P 713,443
Problem 15-6
Overhead Variances:
Overhead controllable variance:
Actual overhead P158,000
Budgeted overhead at standard labor hours:
10
Fixed P120,000
Variable (10,000 x P4) 40,000 160,000
Overhead controllable variance P 2,000 (F)
Overhead volume variance:
Budgeted overhead at standard labor hours P160,000
Standard overhead (10,000 x 2) x 7 140,000
Overhead volume variance P 20,000 (U)
Problem 15-7
Overhead Variances:
Overhead controllable variance:
Actual overhead . P74,920
Budgeted overhead at standard labor hours:
Fixed P18,750
Variable (7,350 x P7.50) 55,125 73,875
Overhead controllable variance P 1,045 (U)
Overhead volume variance:
Budgeted overhead at standard labor hours P73,875
Applied overhead (7,350 x P10) 73,500
Overhead volume variance P 375 (U)
Problem 15-8
Overhead Variances:
Overhead controllable variance:
Actual overhead P25,400
Budgeted overhead at standard labor hours:
Fixed P10,400
Variable 14,000 24,400
Overhead controllable variance P 1,000 (U)
Overhead volume variance:
Budgeted overhead at standard labor hours P24,400
Applied overhead (5,000 x P4.8) 24,000
Overhead volume variance P 400 (U)
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Problem 15-9
Overhead Variances:
Overhead controllable variance:
Actual overhead P132,000
Budgeted overhead at standard DL hours:
Fixed P90,000
Variable (12,000 x P3) 36,000 126,000
Overhead controllable variance P 6,000 (U)
Overhead volume variance:
Budgeted overhead at standard DL hours P126,000
Applied overhead (12,000 x P9) 108,000
Overhead volume variance P 18,000 (U)
Problem 15-10
Overhead Variances:
Overhead controllable variance:
Actual overhead P87,500
Budgeted overhead at standard DL hrs:
Fixed P28,000
Variable (3,000 x 20) 60,000 88,000
Overhead controllable variance P 500 (F)
Overhead volume variance:
Budgeted overhead at standard DL hrs. P88,000
Applied overhead 90,000
Overhead volume variance P 2,000 (F)
Sales P240,000
Cost of goods sold (actual cost)
Cost of goods sold at standard cost P180,000
Materials price variance 7,080
Materials quantity variance (900)
Labor price variance (590)
Labor efficiency variance (600)
Overhead controllable variance (500)
Overhead volume variance ( 2,000) 182,490
Gross profit 57,510
Operating expenses 25,000
Net income P 32,510
Problem 15-11
(a) Journal Entries:
1. Materials 6,150
Materials price variance 615
Accounts payable 6,765
Sales P70,000
Cost of goods sold (actual cost)
Cost of goods sold at standard cost P46,000
Material price variance 615
Material quantity variance 150
Labor rate variance ( 420)
Labor efficiency variance 800
Overhead controllable variance ( 200)
Overhead volume variance 400 47,345
Gross profit 22,655
Selling and administrative expenses 2,000
Net income P20,655