# 88 12. Exercises (Part 2). New problems created by Robert Zatulsky, Fall 2022

### Direct Materials Question 1

Joe Buck owns a construction company that builds decks and fences. His most popular deck is a style he created known as the Aikman deck. Joe uses a costing system with standard costs for each of its products. The Aikman deck has the following standard cost:

 Direct Materials (100 pieces of wood at \$5.00/piece) \$500.00 Direct Labour (16 hours at \$20.00/hour) 320.00 Variable Overhead (16 hours at \$2.75/hour) 44.00 Fixed Overhead (16 hours at \$3.33/hour) 53.28 Total \$917.28

The company identifies the material purchase price variance when materials are purchased.

In 2022, Joe Buck started and completed 125 units of the Aikman deck. There were no beginning or ending inventories of work in process.

A total of 12,250 pieces of wood were used in the production at a total cost of \$59,400.

The total variance was \$3,100 favourable. What is the price variance?

### Direct Materials Question 2

Reece’s Company cans peaches in a factory downtown. The company expects to pay \$7.00 a pound for peaches. Reece’s purchased 3,000 pounds of peaches in the month of September at \$6.60 a pound. Calculate the materials price variance.

### Direct Materials Question 3

DJ Blake makes rubber belts for turntables. Blake expects to pay \$37 a pound for rubber. He ended up paying \$39 a pound. With this increase, there was an unfavourable price variance of \$13,120. What was the actual quantity he received?

### Direct Materials Question 4

Jimmy Joe runs JJ Enterprises which owns a plastic button factory. Jimmy Joe expects to pay \$2.00 per pound of plastic. He actually paid \$1.75 per pound. Jimmy Joe actually used 10,000 pounds of plastic and had an unfavourable quantity variance of \$5,000. What was the amount in pounds budgeted?

### Direct Labour Question 1

Joe Buck owns a construction company that builds decks and fences. His most popular deck is a style he created known as the Aikman deck. Joe uses a costing system with standard costs for each of its products. The Aikman deck has the following standard cost:

 Direct Materials (100 pieces of wood at \$5.00/piece) \$500.00 Direct Labour (16 hours at \$20.00/hour) 320.00 Variable Overhead (16 hours at \$2.75/hour) 44.00 Fixed Overhead (16 hours at \$3.33/hour) 53.28 Total \$917.28

Actual labour costs were \$27,250.

Joe built 79 decks throughout there and the company used 1295 hours. What was the labour efficiency variance?

### Direct Labour Question 2

Jacob had the entrepreneurial spirit and loved his CFL so he decided to start a football making company. His company pays his employees \$25/hour and has budgeted 2 hours per football. Jacob’s company made 700 balls and used 1,397 hours. What is the labour efficiency variance?

### Direct Labour Question 3

Randall produces thermal coffee cups. His direct labour cost is \$20 for each cup. Over the year Randy made 5,500 cups and his total labour cost was \$121,000 and he used 5,200 labour hours. What is the labour rate variance?

### Direct Labour Question 4

Campbeda Corp specializes in creating left hand ladies golfclubs. In 2022, Campbeda budgeted to make 440 drivers. Each driver would take 3 hours to make with an estimated wage of \$17/hour.

When looking at their numbers at the end of the year, Campbeda Corp ended up making 450 drivers with a labour cost of \$21,600 and used 1,325 labour hours. What were the labour rate and labour efficiency variances?

Joe Buck owns a construction company that builds decks and fences. His most popular deck is a style he created known as the Aikman deck. Joe uses a costing system with standard costs for each of its products. The Aikman deck has the following standard cost:

 Direct Materials (100 pieces of wood at \$5.00/piece) \$500.00 Direct Labour (16 hours at \$20.00/hour) 320.00 Variable Overhead (16 hours at \$2.75/hour) 44.00 Fixed Overhead (16 hours at \$3.33/hour) 53.28 Total \$917.28

Joe budgeted that he would make 343 decks this year but only made 312 decks. The actual overhead was \$15,974 and labour hours used were 4,825. What was the actual overhead rate and what was the overhead spending variance?

Kevin is the accountant for Kasha Money Enterprises. After a long day of work, Kevin decided that he was going to analyze the year end variable overhead variances. He analyzed the following numbers for his product:

 Actual production 57,456 packages Budgeted production 55,000 packages Standard direct labour hours 3 hours/package Standard variable overhead rate \$2.50/direct labour hour Actual variable overhead costs \$463,670 Total variable overhead variance \$14,329.32 unfavourable

Kasha money used 186,732 labour hours.

What was Kasha Money’s variable overhead spending variance and its variable overhead efficiency variance?

Howlin’ Howie’s Hotdogs just had their year end. Their accountant was analyzing their variable overhead variances. Their analysis came up with the following information:

 Actual production 1,245,712 hotdogs Budgeted production 1,200,000 hotdogs Standard direct labour hours 0.15 hours/hotdog Standard variable overhead rate \$3.33/direct labour hour Actual variable overhead costs \$799,746 Total variable overhead variance \$230,244 favourable

Actual labour hours used were 247,150.

What is Howlin’ Howie’s total variable overhead variance?