Question

Wallis Company manufactures only one product and uses a standard cost system. The company uses a predetermined plantwide overhead rate that relies on direct labor-hours as the allocation base. All of the company's manufacturing overhead costs are fixed-it does not incur any variable manufacturing overhead costs. The predetermined overhead rate is based on a cost formula that estimated $2,884,000 of fixed manufacturing overhead for an estimated allocation base of 288,400 direct labor-hours. Wallis does not maintain any beginning or ending work in process inventory. The company's beginning balance sheet is as follows: $ 740 190 Wallis Company Balance Sheet 1/1/XX (dollars in thousands) Assets Cash Raw materials inventory Finished goods inventory Property, plant, and equipment, net Total assets Liabilities and Equity Retained earnings Total liabilities and equity 310 8,900 $10,140 $10,140 $10,140

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. Part 1 $ 95,400*2 Standard Material Price Standard Quantity Actual Quantity Purchased Actual Quantity used Actual Matrial Price 30.80 190,800 232,000 216,000 29.90 $ Material Price Variance AQIAP-SP) (Actual Price Standard Price) * Actual Quantity $ 30.80 * 232000 $ 29.90 208,800 Favorable Material Quantity Variance SP(AQ-SQ) (Actual Quantity 216,000 776,160 Unfavorable Standard Qty) * Standard Price 190,800 * $ 30.80 $ Standard Hour Rate Standard Hour Actual Hours 95,400*3 14.00 286,200 245,800 Actual Hour Rate $ 16.00 Labor Rate Variance AH(AR-SR) (Actual Rate Standard Rate) * Actual Hours $ 14.00 * 245800 16.00 491,600 Unfavorable Labor Efficiency Variance SR(AH-SH) (Actual Quantity 245,800 $ 565,600 Favorable Standard Qty) * Standard Price 286,200 * $ 14.00 Fixed overhead variance: Actual Fixed overhead Budgeted Fixed Overhead Overhead applied $ 2,742,000 a $ 2,884,000 b $ 2,862,000 C 95,400*3 Hours $10 Budget variance Volume Variance a-b b-c $ $ 142,000 Favorable 22,000 Unfavorable Part 4 Income Statement $ 15,708 12,345 373 Sales Less: Cost of goods sold at standard Total Variance Adjustment Cost of goods sold Gross Margin Less: Selling and admin Expense Net operating Income $ $ $ -12,718 2,990 -2,122 868

Mat Price Mat Qty Variance Variance Labor Rate Variance Labor eff FOVH Budget Variance Variance Work in process Cash $ $ Finished goods 310 PP&E $ 8,900 FOVH Vol Retained Variance Earning $ 10,140 740 -6,937 Raw Materials $ 190 $ -6,653 $ 209 S $ $ -776 + DOOOO 5,877 4,007 $ -492 $ 566 $ $ -3,933 -1,344 2,862 $ -1,398 142 $ -22 -12,745 $ 12,745 $ 15,708 -12,345 $ 15,708 $ -12,345 $ -2,122 $ -373 $ -2,122 $ -209 $ 776 $ 492 $ -566 $ -142 $ 22 Total $ 2,112 $ 683 $ $ 711 $ 7,502 $ - $ - $ - $ - $ - $ - $ 11,008