SCHMIDT MACHINERY COMPANY Standard Cost Sheet
Product: XV-1
Descriptions Quantity Cost Rate Subtotal Total
Direct materials
Aluminum 4 pounds $25/pound $100
PVC 1 pound 40/pound 40
Direct labor 5 hours 40/hour 200
Variable factory overhead 5 hours 12/hour 60
Total variable manufacturing cost $400
Fixed factory overhead 5 hours 24/hour 120 120
Standard manufacturing cost per unit $520
Standard variable selling and administrative cost per unit I pound 50
* Budgeted fixed factory overhead cost = $120,000
Assume that Schmidt Machinery Company had the standard costs reflected in Exhibit 14.5. In a given month, the company used 3,470 pounds of aluminum to manufacture 935 units. The company paid $28.90 per pound during the month to purchase aluminum. At the beginning of the month, the company had 54 pounds of aluminum on hand. At the end of the month, the company had only 34 pounds of aluminum in its warehouse. Schmidt used 4,400 direct labor hours during the month, at an average cost of $41.90 per hour.
Required:
Compute for the month the following variances:
1. The purchase-price variance for aluminum. Indicate whether this variance is favorable (F) or unfavorable (U).
2. The usage variance for aluminum. Indicate whether this variance is favorable (F) or unfavorable (U).
3. The direct labor rate variance. Indicate whether this variance is favorable (F) or unfavorable (U).
4. The direct labor efficiency variance. Indicate whether this variance is favorable (F) or unfavorable (U).

Answers

Answer 1
Answer:

Answer:

See below

Explanation:

1. Purchase price variance

Standard price per pound = $25

Actual price per pound = $28.9

Quantity of aluminium purchased = Closing inventory + Quantity used - Opening inventory

= 34 + 3,470 - 54

= 3,450 pounds

Purchase price variance = (Standard price - Actual price) × Quantity purchased

= ($25 - $28.9) × 3,450

= -$3.9 × 3,450

= $13,455 (U)

2. Usage variance

Standard quantity of Aluminium for actual production

= 935 units × 4 pounds each

= 3,740 pounds

Usage variance = (Standard quantity of material used - Actual quantity used) × Standard price per unit

= (3,740 - 3,470) × $25

= 270 × $25

= $6,750 (F)

3. Direct labor rate variance

= (Standard rate per hour - Actual rate per hour)

× Actual hours for production

= ($40 - $41.9) × 4,400

= -$1.9 × 4,400

= $8,360 (U)

4. Efficiency variance

Standard hours for actual production

= 935 units × 5 per hour

=4,675 hours

Labor efficiency variance = (Standard hours for actual production - Actual hours for actual production) × Standard rate per hour

= (4,675 - 4,400) × $40

= 275 × $40

= $11,000 (F)


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Your friend, Suzie Whitson, has designed a new type of outdoor toy that helps children learn basic concepts such as colors, numbers, and shapes. Suzie’s product will target two groups: day care centers in warm climates and home school programs. Her company is Jiffy Jet and costs for last month follow: Factory rent $ 3,130 Company advertising 1,060 Wages paid to assembly workers 30,500 Depreciation for salespersons’ vehicles 2,200 Screws 535 Utilities for factory 845 Assembly supervisor’s salary 3,580 Sandpaper 185 President’s salary 5,180 Plastic tubing 4,050 Paint 285 Sales commissions 1,350 Factory insurance 1,170 Depreciation on cutting machines 2,000 Wages paid to painters 7,550 Assume that Suzie Whitson has decided to begin production of her outdoor children’s toy. Required: 1 and 2. Identify each of the preceding costs as either a product or a period cost. If the cost is a product cost, decide whether it is for direct materials (DM), direct labor (DL), or manufacturing overhead (MOH) and also identify each of the preceding costs as variable or fixed cost

Answers

Factory rent -$ 3,130- Product - MOH - Fixed

Company advertising- 1,060- Period - Variable

Wages paid to assembly workers -30,500- Product - DL - Variable

Depreciation for salespersons’ vehicles- 2,200- Period - Fixed

Screws- 535- Product - DM - Variable

Utilities for factory -845-Product - MOH - Variable

Assembly supervisor’s salary -3,580- Product - MOH - Fixed

Sandpaper- 185- Product - MOH - Variable

President’s salary -5,180- Period - Fixed

Plastic tubing- 4,050- Product - MOH - variable

Paint -285- Product - DM - Variable

Sales commissions- 1,350- Period - Variable

Factory insurance- 1,170- Product - MOH - fixed

Depreciation on cutting machines- 2,000- Product - MOH - Fixed

Wages paid to painters -7,550-  Product - DL - Variable

  •  Direct materials are those materials and supplies that are consumed during the manufacture of a product, and which are directly identified with that product.

  • Direct labor is production or services labor that is assigned to a specific product, cost center, or work order.  

  • Manufacturing overhead refers to indirect factory-related costs that are incurred when a product is manufactured.

  • Period costs are not directly tied to the production process. Overhead or sales, general, and administrative costs are considered period costs. SG&A includes costs of the corporate office, selling, marketing, and the overall administration of company business.

  • Product costs are the direct costs involved in producing a product. A manufacturer would have production costs that include- Direct labor, Raw materials, Manufacturing supplies, Overhead that's directly tied to the production facility such as electricity.

  • Variable cost is a corporate expense that changes in proportion to production output.

  • Fixed cost is a cost that does not change with an increase or decrease in the number of goods or services produced or sold.

 

 

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Answer:

Factory rent $ 3,130: Product - MOH - Fixed

Company advertising 1,060: Period - Variable

Wages paid to assembly workers 30,500: Product - DL - Variable

Depreciation for salespersons’ vehicles 2,200: Period - Fixed

Screws 535: Product - DM - Variable

Utilities for factory 845: Product - MOH - Variable

Assembly supervisor’s salary 3,580: Product - MOH - Fixed

Sandpaper 185: Product - MOH - Variable

President’s salary 5,180: Period - Fixed

Plastic tubing 4,050: Product - MOH - variable

Paint 285: Product - DM - Variable

Sales commissions 1,350: Period - Variable

Factory insurance 1,170: Product - MOH - fixed

Depreciation on cutting machines 2,000: Product - MOH - Fixed

Wages paid to painters 7,550:  Product - DL - Variable

Explanation:

- Direct materials are those materials and supplies that are consumed during the manufacture of a product, and which are directly identified with that product.

- Direct labor is production or services labor that is assigned to a specific product, cost center, or work order.  

- Manufacturing overhead refers to indirect factory-related costs that are incurred when a product is manufactured.

- Period costs are not directly tied to the production process. Overhead or sales, general, and administrative (SG&A) costs are considered period costs. SG&A includes costs of the corporate office, selling, marketing, and the overall administration of company business.

- Product costs are the direct costs involved in producing a product. A manufacturer, for example, would have production costs that include: Direct labor, Raw materials, Manufacturing supplies, Overhead that's directly tied to the production facility such as electricity.

- Variable cost is a corporate expense that changes in proportion to production output.

- Fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

In this exercise:

Factory rent $ 3,130: Product - MOH - Fixed

Company advertising 1,060: Period - Variable

Wages paid to assembly workers 30,500: Product - DL - Variable

Depreciation for salespersons’ vehicles 2,200: Period - Fixed

Screws 535: Product - DM - Variable

Utilities for factory 845: Product - MOH - Variable

Assembly supervisor’s salary 3,580: Product - MOH - Fixed

Sandpaper 185: Product - MOH - Variable

President’s salary 5,180: Period - Fixed

Plastic tubing 4,050: Product - MOH - variable

Paint 285: Product - DM - Variable

Sales commissions 1,350: Period - Variable

Factory insurance 1,170: Product - MOH - fixed

Depreciation on cutting machines 2,000: Product - MOH - Fixed

Wages paid to painters 7,550:  Product - DL - Variable

Fetzer Company declared a $0.55 per share cash dividend. The company has 200,000 shares authorized, 190,000 shares issued, and 8,000 shares in treasury stock. The journal entry to record the payment of the dividend is:

Answers

Answer:

Please see journals below

Explanation:

Retained earnings Dr $104,000

Common dividend payable Cr $104,000

Common dividend payable Dr $104,000

Cash Cr. $104,000

Retained earnings Dr $100,100

Common dividends payable Cr $100,100

Common dividends payable Dr $100,100

Cash Cr $100,100

Retained earnings Dr $110,000

Common dividends payable Cr $110,000

Working

Dividends payable

= 190,000 × $0.55

= $104,000

Common dividend payable

= $0.55 × (190,000 shares - 8,000 shares)

= $100,100

Use the cost and revenue data to answer the questions. Quantity Price Total Revenue Total Cost 15 90 1350 900 30 80 2400 1500 45 70 3150 2250 60 60 3600 3150 75 50 3750 4200 90 40 3600 5400 What is marginal revenue when quantity is 30 ? 30? $ What is marginal cost when quantity is 60 ? 60? $ If this firm is a monopoly, at what quantity will profit be maximized? quantity: If this is a perfectly competitive market, which quantity will be produced? quantity: Comparing monopoly to perfect competition, which statement is true? The perfectly competitive market's ouput is lower. The consumer surplus is smaller with a monopoly. The monopoly's price is higher.

Answers

Answer:

What is marginal revenue when quantity is 30 ? 30?

  • $70

= ($2,400 - $1,350) / (30 - 15) = $900 / 15 = $70  

What is marginal cost when quantity is 60 ? 60?

  • $60

= ($3,150 - $2,250) / (60 - 45) = $900 / 15 = $60

If this firm is a monopoly, at what quantity will profit be maximized?

  • quantity: 45 units

a monopoly maximizes its accounting profit when marginal revenue = marginal cost, in this case they both equal $50 per unit when total output is 45 units

If this is a perfectly competitive market, which quantity will be produced?

  • quantity: 45 units

a perfectly competitive firm maximizes its accounting profit when marginal revenue = marginal cost, in this case they both equal $50 per unit when total output is 45 units

Comparing monopoly to perfect competition, which statement is true?

  • The consumer surplus is smaller with a monopoly.
  • The monopoly's price is higher.

In a monopoly, output is smaller than the perfectly competitive output. The price charged by a monopolist is also higher. This also results in lower consumer surplus with a monopoly.

Explanation:

Quantity      Price       Total Revenue            Total Cost

15                 90                   1350                         900

30                80                   2400                      1500

45                70                    3150                      2250

60                60                  3600                       3150

75                50                   3750                      4200

90                40                  3600                      5400

The marginal revenue is $70, when the quantity is 30.

The marginal cost is $60 when quantity is 60.

If this firm is a monopoly, at 450units the profit will be maximized.

In perfect competition, a firm produces where price and marginal cost both are equal. Both price and marginal cost are equal at 60 units. Comparing monopoly to perfect competition, the monopoly's price is higher. Thus, the first option is correct.

A financial ratio called the marginal revenue (MR)formula estimates the change in total revenue brought on by the sale of more goods or units. It typically slows down as output levels rise and is observed to follow the rule of diminishing returns. It is frequently shown as a graph with a declining slope.

Marginal revenue at 30 units of quantity:

= Change in Total Revenue / Change in Quantity

2400 - 1350 / 30 - 15

= $70

Marginal cost at 60 units of quantity:

= Change in Total Cost / Change in Quantity

= 3150 - 2250 / 60 - 45

= $60

If the firm is a monopoly then marginal profit will be zero at 45 units. If marginal revenue and marginal cost both are equal then marginal profit can be zero

In perfect competition, a firm produces where price and marginal cost both are equal. Both price and marginal cost are equal at 60 units

Comparing monopoly to perfect competition, the monopoly's price is higher .As in monopoly, the price at 45 units is $70 and in perfect competition, the price at 60 units is $60.

A table is attached for reference.

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Total spending will equal total output A. after inventory adjustments B. only when total leakages are equal to total injections C. by the end of every year D. only when the sum of saving and investment equals the sum of net taxes and government expenditures E. saving is equal to net taxes

Answers

Answer:

Option D is correct one.

Saving plus net taxes equals planned investment plus government purchases.

Explanation:

Total spending equals total output if and only if leakages are equal to injections—that is, only if the sum of saving and net taxes  is equal to the sum of planned investment spending and government purchases.

Answer:

D. only when the sum of saving and investment equals the sum of net taxes and government expenditures

Explanation:

Based on the scenario being said in the question where it is asked that which total spending will equal total, that will happen only when the sum of the savings and investment.

Total spending can only equals total output if and only if leakages will be equal to injections, in other words, only if the sum of saving and net taxes (addition of Saving and Nets) is equal to the sum of planned investment spending and government purchases (addition of planned investment and government purchases.)

Assume the total cost of a college education will be $200,000 when your child enters college in 16 years. You presently have $73,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child’s college education?

Answers

Answer:

6.5017%

Explanation:

Given that,

Total cost of a college education when your child enters college in 16 years, Future value = $200,000

Amount today to invest, present value = $73,000

Time period = 16 years

Therefore,

Annual rate of interest:

FV=PV(1+r)^(t)

200,000=73,000(1+r)^(16)

r =((200,000)/(73,000))^{(1)/(16)}-1

r = 6.5017%

Therefore, the annual rate of interest you must earn on your investment to cover the cost of your child’s college education is 6.5017%.

Bogart Company is considering two alternatives. Alternative A will have revenues of $160,000 and costs of $100,000. Alternative B will have revenues of $180,000 and costs of $125,000. Compare Alternative A to Alternative B showing incremental revenues, costs, and net income.

Answers

Answer:

Alternative A has lower incremental revenue but it's lower incremental costs makes the net income higher than of Alternative B.

Explanation:

Alternative A

The net income is computed with the formula as:

Net Income = Incremental Revenue - Incremental Cost

= $160,000 - $100,000

= $60,000

Alternative B

The net income is computed with the formula as:

Net Income = Incremental Revenue - Incremental Cost

= $180,000 - $125,000

= $55,000

Alternative A has lower incremental revenue but it's lower incremental costs makes the net income higher than of Alternative B.

Assuming the company is considering two alternatives.  Alternative A to Alternative B  net income is: $60,000; $55,000.

Net income

Alternative A Alternative B Net Income Increase (Decrease)

Revenues $ 160,000 $100,000 $60,000

($160,000-$100,00)

Costs               $180,000 125,000  $55,000

($180,000-$125,000)

Inconclusion Alternative A to Alternative B  net income is: $60,000; $55,000.

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