X hits on this document

# CHAPTER 14 - page 53 / 62

132 views

0 shares

53 / 62

14-37 (35 min.)  Direct materials price, efficiency, mix and yield variances (Chapter Appendix).

1.Solution Exhibit 14-37A presents the total price variance (\$3,100F), the total efficiency variance (\$2,560U), and the total flexible-budget variance (\$540F).

Total direct materials price variance can also be computed as:

= ×

Tolman=(\$0.28 – \$0.30) ×   62,000=\$1,240 F

Golden Delicious=(\$0.26 – \$0.26) × 155,000=0

Ribston=(\$0.20 – \$0.22) ×   93,000=  1,860 F

Total direct materials price variance\$3,100 F

Total direct materials efficiency variance can also be computed as:

##### =   ×

Tolman=(  62,000  –   45,000) × \$0.30=\$5,100 U

Golden Delicious=(155,000  – 180,000) × \$0.26=6,500 F

Ribston=(  93,000  –   75,000) × \$0.22=  3,960 U

Total direct materials efficiency variance\$2,560 U

## SOLUTION EXHIBIT 14-37A

Columnar Presentation of Direct Materials Price and Efficiency Variances for Greenwood Inc.

for November 2003

Actual Costs

Incurred

(Actual Inputs

× Actual Prices)

(1)

Actual Input

× Budgeted Prices

(2)

Flexible Budget

(Budgeted Inputs

Allowed for Actual

Outputs Achieved

× Budgeted Prices)

(3)

Tolman

Golden Delicious

Ribston

62,000 × \$0.28 = \$17,360

155,000 × \$0.26 = 40,300

93,000 × \$0.20 =

\$76,260

62,000 × \$0.30 = \$18,600

155,000 × \$0.26 = 40,300

93,000 × \$0.22 =

\$79,360

45,000 × \$0.30 = \$13,500

180,000 × \$0.26 = 46,800

75,000 × \$0.22 =  16,500

\$76,800

\$3,100 F\$2,560 U

Total price varianceTotal efficiency variance

\$540 F

Total flexible-budget  variance

F = favorable effect on operating income;  U = unfavorable effect on operating income

14-53

 Document views 132 Page views 132 Page last viewed Fri Oct 28 00:42:31 UTC 2016 Pages 62 Paragraphs 2332 Words 13486