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References
Exercise XXXXXXXXXXAlgo) Determining Standard Direct Materials Cost [LO 14-4]
Agrichem manufactures Insect-Be-Gone. Each bag of the product contains 56 pounds of direct materials. Twenty percent of the
materials evaporate during manufacturing. The budget allows the direct materials to be purchased at $2.50 per pound (gross cost)
under terms of 4/10, n/30. The company’s stated policy is to take all available cash discounts.
Required:
Determine the standard direct materials cost for one bag of Insect-Be-Gone. (Do not round intermediate calculations.)


2
25
points.
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Exercise XXXXXXXXXXAlgo) Behavioral Consider:

ns and Continuous-Improvement Standards [LO 14-3, 14-4]

At a recent seminar you attended, the invited speaker was discussing some of the advantages and disadvantages of standard costs in
terms of evaluating performance and motivating goal-congruent behavior on the part of employees. One criticism of standard costs in
particular caught your attention: The use of conventional standard costs may not provide appropriate incentives for improvements.
needed to compete effectively with world-class organizations. The speaker then discussed so-called continuous-improvement
standard costs. Such standards embody systematically lower costs over time. For example, on a monthly basis, it might be appropriate
to budget a 1.0% reduction in per-unit direct labor cost.
Assume that the standard wage rate into the foreseeable future is $23 per hour. Assume, too, that the budgeted labor-hour standard
for October of the cu
ent year is 2.80 hours and that this standard is reduced each month by 2%. During December of the cu
ent
year the company produced 7.000 units of XL-10, using 21,500 direct labor hours. The actual wage rate per hour in December was
$25.00.
Required:
1. Prepare a table that contains the standard labor-hour requirement per unit and standard direct labor cost per unit for the 4 months,
October through January.
2. Compute the direct labor efficiency variance for December. Was this variance favorable or unfavorable?

Complete this question by entering your answers in the tabs below.

Required 1 | Required 2
Prepare a table that contains the standard Iabor-hour requirement per unit and standard direct labor cost per unit for the 4
months, October through January. (Do not round intermediate calculations. Round your "Standard Direct Labor Cost/Unit"
answers to 2 decimal places and "Standard Labor-Hour Requirement/Unit’ answers to 5 decimal places.)
October hour per unit
November I hourperunit [|
December I hourperunit [|
January I hour per unit I


2
25
points.
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Exercise XXXXXXXXXXAlgo) Behavioral Considerations and Continuous-Improvement Standards [LO 14-3, 14-4]
At a recent seminar you attended, the invited speaker was discussing some of the advantages and disadvantages of standard costs in
terms of evaluating performance and motivating goal-congruent behavior on the part of employees. One criticism of standard costs in
particular caught your attention: The use of conventional standard costs may not provide appropriate incentives for improvements.
needed to compete effectively with world-class organizations. The speaker then discussed so-called continuous-improvement
standard costs. Such standards embody systematically lower costs over time. For example, on a monthly basis, it might be appropriate
to budget a 1.0% reduction in per-unit direct labor cost
Assume that the standard wage rate into the foreseeable future is $23 per hour. Assume, too, that the budgeted labor-hour standard
for October of the cu
ent year is 2.80 hours and that this standard is reduced each month by 2%. During December of the cu
ent
year the company produced 7.000 units of XL-10, using 21,500 direct labor hours. The actual wage rate per hour in December was
$25.00.
Required:
1. Prepare a table that contains the standard labor-hour requirement per unit and standard direct labor cost per unit for the 4 months,
October through January.
2. Compute the direct labor efficiency variance for December. Was this variance favorable or unfavorable?
Complete this question by entering your answers in the tabs below.

Required 1 | Required 2
Compute the direct labor efficiency variance for December. Was this variance favorable or unfavorable? (Round your final
answer to nearest whole dollar amount.)
Required 1

25
points.
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0
References
Exercise XXXXXXXXXXAlgo) Master Budget Variance and Its Components [LO 14-2, 14-3]
As the new accountant for Cohen & Company, you have been asked to provide a succinct analysis of financial performance for the
year just ended. You obtain the following information that pertains to the company’s sole product:
Actual Master Budget
units sold 45,000 50,000
Sales $ 390,000 $ 450,000
Variable costs 214;000 270,000
Fixed costs 150,000 136,000
Required:
1. What was the actual operating income for the period?
2. What was the company’s master budget operating income for the period?
3. (a) What was the total master budget variance, in terms of operating income, for the period? (b) Is this variance favorable o
unfavorable? (If a variance has no amount, select "None" in the co
esponding dropdown cell)
4. The total master budget variance for a period can be decomposed into a total flexible budget variance and a sales volume variance.
(a) What was the total flexible-budget variance for the period? (b) Was this variance favorable or unfavorable? (c) What was the sales
volume variance for the period? (c) Was this variance favorable or unfavorable? (If a variance has no amount, select "None" in the
co
esponding dropdown cell.)
Actual operating income
Master budget operating income
Total master budget variance
Total flexible-budget variance
aon

Sales volume variance
TTT


References
Exercise XXXXXXXXXXAlgo) Flexible Budgets; Master Budget Variance; Breakdown of the Master Budget
Variance; Spreadsheet Application [LO 14-1, 14-2, 14-3]
The following information is available for Brownstone Products Company for the month of July:
Maste
Actual Budget
Units 3,500 4,000
Sales revenue $54,300 $60,000
Variable manufacturing costs 10,000 16,000
Fixed manufacturing costs 13,000 14,000
Variable selling and administrative expenses 6,500 5,000
Fixed selling and administrative expenses 5,000 9,100
Required:
1. What was the master budget variance for July? Was this variance favorable or unfavorable?
2. Compute the July sales volume variance and the flexible-budget variance for the month, both in terms of contribution margin and in
terms of operating income.
4. Prepare pro-forma budgets for activities within its relevant range of operations. Prepare a flexible budget for each of the following
two output levels:
2.3,560 units.
.3,980 units.
Complete this question by entering your answers in the tabs below.
Required 1 | Required 2 Required 4
What was the master budget variance for July? Was this variance favorable or unfavorable? (Indicate the effect of each
variance by selecting "F" for Favorable, "U" for Unfavorable, and "None" for no effect (i.e., zero variance).)
LTRS
Answered 1 days After Mar 09, 2024

Solution

Atul answered on Mar 10 2024
9 Votes
Question 1 : Agrichem manufacture insect-be-Gone. Each bag of the product contains 56 pounds of the direct material. Twenty percent of the materials evaporate during maufacturing. the budget allows the direct material to be purchased at $2.50 per pound (gross cost) under terms of 4/10, n/30. The company's stated policy is to take all available cash discount. Now, determine the standard direct material cost for one bag of insect-be-gone (do not round immediate calculations)
Solution :
To determine the standard direct material cost for one bag of Insect-Be-Gone, we need to consider the following components:
The standard direct materials cost for one bag of Insect-Be-Gone is $194.
First, let's calculate the actual quantity of materials used in one bag of Insect-Be-Gone after accounting for evaporation:
Actual quantity of materials used = Quantity of materials specified / (1 - Evaporation rate)
Actual quantity of materials used = 60 pounds / (1 - 0.25)
Actual quantity of materials used = 60 pounds / 0.75
Actual quantity of materials used = 80 pounds
Next, let's calculate the standard direct materials cost per pound:
Standard direct materials cost per pound = Purchase price per pound - Cash discount per pound
Standard direct materials cost per pound = $2.50 per pound - ($2.50 per pound * 0.03)
Standard direct materials cost per pound = $2.50 per pound - $0.075 per pound
Standard direct materials cost per pound = $2.425 per pound
Finally, we can calculate the standard direct materials cost for one bag of Insect-Be-Gone:
Standard direct materials cost = Standard direct materials cost per pound * Actual quantity of materials used
Standard direct materials cost = $2.425 per pound * 80 pounds
Standard direct materials cost = $194
Question 2 : At a recent seminar you attended, the invited speaker was discussing some of the advantages and disadvantages of standard cost in terms of evaluating performance and motivating goal congruent-behavior on the part of employees. One criticism of standard cost in particular caught your attention. The use of conventional standard cost may not provide appropriate incentives for improvements needed to compete effectively with world-class organizations. The speaker then discussed so-called continuous improvement standard cost. such standards embody systematically lower cost over time. for example, on a monthly basis, it might be appropriate to budget a 10% reduction in per unit direct labour cost assume that the standard wage rate into the foreseeable future is $23 per hour . Assume too, that the budget labour hour standard for october of the cu
ent year is 2.80 hours and that this standard is reduced each month by 2%. During december of the cu
ent year the company produced 7000 units of XL-10, using 21500 direct labour hours. The actual wage rate per hour in December was $25
equired:
1.prepare a table that contains the standard labour hour requirement per unit and standard direct labour per unit for the 4 months from october through january
Solution :
For the...
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