Question

1. The following information is available for Krane, Inc.

Standard Actual

DM Cost $1/yard $65,587.50

DM Quantity 3 yards/unit 66,250 yards

DL Rate $9/hour $99,190

DL Hours 0.5 hours/unit 10,900 hours

Variable OH Rate $5/direct labor hour $55,100

Variable OH Quantity 0.5 direct labor hours/unit

Fixed OH Cost (based on units) $24,000 budgeted $24,500

The company’s normal capacity is 10,000 direct labor hours and it produced and sold 22,000 units of its product. Calculate the following:

a. DM Cost Variance: _________________________________

b. DM Price Variance: _________________________________

c. DM Quantity Variance: _________________________________

d. DL Cost Variance: _________________________________

e. DL Rate Variance: _________________________________

f. DL Efficiency Variance: _________________________________

g. Variable OH Cost Variance: _________________________________

h. Variable OH Spending Variance: _________________________________

i. Variable OH Efficiency Variance: _________________________________

j. Fixed OH Cost Variance: _________________________________

k. Fixed OH Budget Variance: _________________________________

l. Fixed OH Volume Variance: _________________________________

To receive full credit, you must attach a sheet to the back of this page showing your work.

 

2. Dunnes Stores operates a retail store and has two service departments and two operating departments, Hardware and Automotive. During the current year, the departments had the following direct expenses and occupied the following amount of floor space.

Department Sales Direct Expenses Square Feet

Advertising $50,000 750

Administrative 100,000 1,500

Hardware $675,000 150,000 3,000

Automotive $825,000 200,000 9,750

Indirect expenses include rent, utilities, and insurance expense and totaled $220,000. Indirect expenses of $220,000 are allocated to all departments on the basis of square footage.

The advertising department’s expenses are allocated on the basis of ad spots developed and aired. The department developed and aired 60 spots for Hardware and 90 spots for Automotive.

The administrative department’s expenses are allocated on the basis of sales.

Prepare a departmental income statement for Dunnes. To receive full credit, you must attach a sheet to the back of this page showing your work.

what do you mean??

Answer 1

Dear student, we cannot able to post solution more than one question as per our policy.

Summary of Answer
Material
DM Price Variance	$         662.50	Favorable
DM Quantity Variance	$         250.00	Unfavorable
DM Cost Variance	$         412.50	Favorable
Labor
DL Rate Variance	$     1,090.00	Unfavorable
DL Efficiency Variance	$         900.00	Favorable
DL Cost Variance	$         190.00	Unfavorable
Variable Overhead
Variable OH Spending Variance	$         600.00	Unfavorable
Variable OH Efficiency Variance	$         500.00	Favorable
Variable OH Cost Variance	$         100.00	Unfavorable
Fixed overhead
Fixed OH Volume Variance	$     2,400.00	Favorable
Fixed OH Budget Variance	$         500.00	Unfavorable
Fixed OH Cost Variance	$     1,900.00	Favorable

Calculation

	Minus sign indicate Favorable variance.
	Measure	Yard
	Standard price per Yard	$            1.00
65587.50/66250	Actual price per Yard	$            0.99
22000*3	Standard quantity in Yards	66000
	Actual quantity purchased in Yards	66250
	Actual quantity used in Yards	66250
	Actual price per Yard	0.99
Less	Standard price per Yard	-1.00
	Difference	-0.01
Multiply	Actual quantity purchased in Yards	66250
	DM Price Variance	$     (662.50)
	Indicate	Favorable
	Actual quantity used in Yards	66250
Less	Standard quantity in Yards	-66000
	Difference	250
Multiply	Standard price per Yard	1.00
	DM Quantity Variance	$        250.00
	Indicate	Unfavorable
	DM Cost Variance (Total of both variance)	$     (412.50)
	Indicate	Favorable

	Minus sign indicate Favorable variance.
	Measure	Hour
	Standard rate per Hour	$              9.00
99190/10900	Actual rate per Hour	$              9.10
22000*0.5	Standard labor Hours	11000
	Actual labor Hours	10900
	Actual rate per Hour	9.10
Less	Standard rate per Hour	-9.00
	Difference	0.10
Multiply	Actual labor Hours	10900
	DL Rate Variance	$      1,090.00
	Indicate	Unfavorable
	Actual labor Hours	10900
Less	Standard labor Hours	-11000
	Difference	-100
Multiply	Standard rate per Hour	9.00
	DL Efficiency Variance	$       (900.00)
	Indicate	Favorable
	DL Cost Variance (Total of both variance)	$          190.00
	Indicate	Unfavorable

	Minus sign indicate Favorable variance.
	Measure	Labor Hour
	Standard variable overhead rate per Labor Hour	$                5.00
55100/10900	Actual variable overhead rate per Labor Hour	$                5.06
22000*0.5	Standard Labor Hours	11000
	Actual Labor Hours	10900
	Actual variable overhead rate per Labor Hour	5.06
Less	Standard variable overhead rate per Labor Hour	-5.00
	Difference	0.06
Multiply	Actual Labor Hours	10900
	Variable OH Spending Variance	$           600.00
	Indicate	Unfavorable
	Actual Labor Hours	10900
Less	Standard Labor Hours	-11000
	Difference	-100
Multiply	Standard variable overhead rate per Labor Hour	5.00
	Variable OH Efficiency Variance	$         (500.00)
	Indicate	Favorable
	Variable OH Cost Variance (Total of both variance)	$           100.00
	Indicate	Unfavorable

Minus sign indicate Favorable variance.
Budgeted Fixed Overheads	24,000
Actual Fixed Overheads	24,500
Budgeted units (10000 budgeted hours /0.50 hours per unit)	20,000
Actual units	22,000
Overhead rate =( Budgeted Fixed Overheads / Budgeted units)
Applied Fixed Overhead = (Budgeted Fixed Overhead Rate * Actual units)
Budgeted Fixed Overhead Rate (24000/20000)	$                     1.20
Budgeted Fixed Overheads	24000
Less: Applied Fixed Overhead (1.2*22000)	-26400
Fixed OH Volume Variance	$                (2,400)
Indicate	Favorable
Actual Fixed Overheads	24500
Less: Budgeted Fixed Overheads	-24000
Fixed OH Budget Variance	$                      500
Indicate	Unfavorable
Fixed OH Cost Variance (Total of both variance)	$                (1,900)
Indicate	Favorable