Question

9F P11-1A Practice Questions.docx Download Accessibility Mode Print Find IF Immers Rogen uses the standard cost system. The Static original budgeted production was 5,000 units for October. The input standards were: Std Quantity x Std Price per input =Std Cost per Output U Direct materials 1 lb./Output unit x $7 /lb. = $7 per output unit Direct labor 1.6 hrs. /Output unit x $12/hr. - $19.20 per unit Variable manufacturing (Mfg.) overhead 1.6 hrs. x $7.50 per hr = $12 per unit Fixed mfg. overhead [Budget $20,000) 1.6 hrs.. x $2.50 per hr = $4 per unit It Applied the standard costs to Actual Production throughout the period. As of the end of the period, a Flexible budget was prepared, to compute Production volume variance, and the Quantity Usage efficiency variances for Material and Labor actual usages separately. When Actual Costs are known a couple months later, it retroactively calculated Material Purchase Price and Labor Rate (or Price) variances; and Overhead Controllable variances. Rogen gathered the following actual results for October: Actual Units produced 4,800 Direct materials purchased and used (5,100 lbs.) $36,720 Direct labor cost (7,400 hours actual) $92,500 Manufacturing overhead costs incurred: Variable $59,700 and Fixed $21,000. Q1. To apply direct labor costs to production, the joumal entry should include: A) Credited for standard quantity usage of direct labor for actual production times actual price per hour B) Debited for actual quantity of direct labor times standard price per hour C) Credited for standard quantity of direct labor used for actual production times standard price per hour D) Debited for standard quantity of direct labor used for actual production times standard price per hour. Q2. What is the fixed overhead (or production) volume variance amount?_ Show calculation below. Q3. Which manager or who is most likely responsible for production-volume variances? A. Purchasing. B. Marketing. C. Production. D. Chief Executive

Answer 1

Solution 1:

To apply direct labor cost to production, the journal entry should include "Debited for standard quantity of direct labor used for actual production times standard price per hour"

Hence option D is correct.

Solution 2:

Fixed overhead production volume variance = Fixed overhead applied - Budgeted fixed overhead

= (4800*$4) - $20,000 = $800 U

solution 3:

Production manager is most likely responsible for production volume variance.