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Assignment Type: Individual Project Deliverable Length: 500–1,000 words Points Possible: 125 Due Date: 2/17/2013 11:59:59 PM CT APA formatted references AJack Partnership manufactures jackhammers....

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Assignment Type:Individual Project Deliverable Length:500–1,000 words
Points Possible:125 Due Date:2/17/2013 11:59:59 PM CT
APA formatted references

AJack Partnership manufactures jackhammers. AJack Partnership is looking for guidance in the variances of its standard cost system. It would like you to assist in understanding material price, material quantity, rate, efficiency, and overhead variances.

The standard cost card information for unit of product is below.

Standard cost card per unit of product

Direct materials: 4 pounds at $9.00 per pound of steel

$36.00

Direct labor: 2.0 direct labor hours at $20.00 per hour

40.00

Variable overhead: 100% of a direct labor hour at $10.00 per hour

20.00

Fixed overhead: 100% of a direct labor hour at $20.00 per hour

40.00

Standard cost per unit

$136.00

The following information is available in the year just finished:

  • AJack Partnership manufactured 10,000 jackhammers during the year.
  • The total purchases of steel in the year at a cost of $8.75 per pound were 45,000 pounds.
  • All of the material was used to manufacture the 10,000 jackhammers.
  • There was no beginning or ending inventory.
  • The material was purchased on January 15, 20XX
  • AJack Partnership incurred 21,000 direct labor hours at $19.50 per hour.
  • During the year, one production order was issued on February 15 20XX, number 789, for 10,000 jackhammers.
  • Actual variable overhead was $210,000.
  • Actual fixed overhead was $405,000.

Assignment Guidelines:

Material

  1. Compute the material price variance for Jan 15, 20XX.
  2. Provide the accounting entry for the price variance.

Labor

  1. Compute the labor rate variance.
  2. Compute the labor efficiency variance.
  3. Provide the accounting entry for the labor rate and efficiency variances.

Overhead

  1. Compute the variable overhead rate variance.
  2. Compute the variable overhead efficiency variance.
  3. Provide the accounting entry for the overhead rate and efficiency variances.
Answered Same Day Dec 22, 2021

Solution

Robert answered on Dec 22 2021
124 Votes
Role of standard costing and variance analysis in management accounting
A standard is nothing but a budgeted amount for a single unit of output. A standard
cost for one unit is the budgeted cost (production/sales/other specified) for that unit. The entity,
which wants to apply standard costs, requires estimating the efficient and attainable performance
of each activity. Based on this attainable and efficient performance estimate, the budgeted cost
for each activity (or group of activities) is (are) determined. In other words, the standards are set
for input quantity needed for each activity and the estimated cost for each input. Based on this,
standard outputs are budgeted and standard cost for each output is determined. Standard costing
is the accounting of transactions or activities based on standard cost, rather than on actual cost
asis. The difference between standard cost and actual cost, known as variance, are charged
directly to income statement.
The standard costing & variance analysis helps the management in determining
estimated cost for each activity. They can use this tool in measuring performance, estimating
sales prices of final products and bidding for some projects/works, figuring out the area of
concerns etc.
The difference between standard and actual costs is known as variances. These variances
are what make standard costing such a valuable practice for management. Management can...
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