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 $2,919,000 of fixed manufacturing overhead for an estimated allocation base of 291,900 direct labor-hours. Wallis does not maintain any beginning or ending work in process inventory.
The company’s beginning balance sheet is as follows:
Wallis Company | ||
Balance Sheet | ||
1/1/XX | ||
(dollars in thousands) | ||
Assets | ||
Cash | $ | 890 |
Raw materials inventory | 340 | |
Finished goods inventory | 460 | |
Property, plant, and equipment, net | 10,400 | |
Total assets | $ | 12,090 |
Liabilities and Equity | ||
Retained earnings | $ | 12,090 |
Total liabilities and equity | $ | 12,090 |
The company’s standard cost card for its only product is as follows:
Inputs | (1) Standard Quantity or Hours |
(2) Standard Price or Rate |
Standard Cost (1) × (2) |
||||
Direct materials | 2 pounds | $ | 33.80 | per pound | $ | 67.60 | |
Direct labor | 3.00 hours | $ | 14.00 | per hour | 42.00 | ||
Fixed manufacturing overhead | 3.00 hours | $ | 10.00 | per hour | 30.00 | ||
Total standard cost per unit | $ | 139.60 | |||||
During the year Wallis completed the following transactions:
Required:
1. Compute all direct materials, direct labor, and fixed overhead variances for the year.
2. Record transactions a through i for Wallis Company.
3. Compute the ending balances for Wallis Company’s balance sheet.
4. Prepare Wallis Company’s income statement for the year.
INTERESTED IN QUESTION 2,3 and 4
Part 1
Materials price variance = AQ*(AC-SC) = 239500*(31.40-33.80) = $574800 F
Materials quantity variance = SC*(AQ-SQ) = 33.80*(219750-(96900*2)) = $877110 U
Labor rate variance = AH*(AR-SR) = 248800*(16-14) = $497600 U
Labor efficiency variance = SR*(AH-SH) = 14*(248800-(96900*3)) = $586600 F
Budget variance = actual FOH – Budgeted FOH = 2749500-2919000 = 169500 F
Volume variance = Budgeted FOH – Applied FOH = 2919000-(96900*3*10) = 12000 U
Part 2 & 3
Wallis company Transaction analysis For the year ended 12/31/XX (dollars in thousands) |
||||||||||||||
Cash |
Raw materials |
Work-in-progress |
Finished goods |
PP&E (net) |
= |
Material price variance |
Material quantity variance |
Labor rate variance |
Labor efficiency variance |
Fixed overhead budget variance |
Fixed overhead volume variance |
Retainer earnings |
||
1/1 |
890 |
340 |
460 |
10400 |
12090 |
|||||||||
a. |
(7520) |
8095 |
575 |
|||||||||||
b. |
(7428) |
6550 |
(878) |
|||||||||||
c. |
(3981) |
4070 |
(498) |
587 |
||||||||||
d. |
(1359) |
2907 |
(1390) |
170 |
(12) |
|||||||||
e. |
(13527) |
13527 |
||||||||||||
f. |
15963 |
15963 |
||||||||||||
g. |
(13108) |
(13108) |
||||||||||||
h. |
(2130) |
(2130) |
||||||||||||
i. |
(575) |
878 |
498 |
(587) |
(170) |
12 |
(56) |
|||||||
1863 |
1007 |
0 |
879 |
9010 |
0 |
0 |
0 |
0 |
0 |
0 |
12759 |
|||
96900*139.60 = 13527240
93900*170 =15963000
93900*139.60 = 13108440
Part 4
Income statement
Sales |
15963 |
|
Cost of goods sold (standard) |
13108 |
|
Total variance adjustments |
56 |
|
Cost of goods sold (actual) |
13164 |
|
Gross profit (actual) |
2799 |
|
Selling and administrative expenses |
2130 |
|
Net income |
$699 |
Wallis Company manufactures only one product and uses a standard cost system. The company uses a...
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 $2,886,000 of fixed manufacturing overhead for an estimated allocation base of 288,600 direct labor-hours. Wallis does not maintain any beginning or ending...
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 $2,894,000 of fixed manufacturing overhead for an estimated allocation base of 289,400 direct labor-hours. Wallis does not maintain any beginning or ending...
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...
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 $2,889,000 of fixed manufacturing overhead for an estimated allocation base of 288,900 direct labor-hours. Wallis does not maintain any beginning or ending...
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...
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 $2,899,000 of fixed manufacturing overhead for an estimated allocation base of 289,900 direct labor-hours. Wallis does not maintain any beginning or ending...
Help please !
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 baseed on a cost formula that estimated $2,882,000 of fixed manufacturing overhead for an estimated allocation base of 288,200 direct labor-hours. Wallis does not maintain any...
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 $2,882,000 of fixed manufacturing overhead for an estimated allocation base of 288,200 direct labor-hours. Wallis does not maintain any beginning or ending...
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 $2,893,000 of fixed manufacturing overhead for an estimated allocation base of 289,300 direct labor-hours. Wallis does not maintain any beginning or ending...
**PLEASE SHOW WORK, THANK YOU.
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 $2,889,000 of fixed manufacturing overhead for an estimated allocation base of 288,900 direct labor-hours. Wallis does not...