7.27 Deviations of raw materials and production work, standard costs. The following selective data are given on a production line of padded seats: Standard values per seat Direct raw materials Direct production work 2 m of raw material at $10 per m 0.5 hours of work at $20 per hour The following data were compiled on the actual results: actual production-20,000 units (chairs); raw materials purchased and used -37,000 m; raw material price - $10,20/m²; direct cost of production work $176,400; the actual number of hours of direct work - 9,000; direct labor price- $19.60/time. 1. Present the calculations of price and efficiency deviations of direct raw materials and direct production work. Provide a plausible explanation of the causes that caused these deviations. 2. Suppose that 60,000 m² of raw materials were bought (at the price of $10.20/mf), although only 37,000 m. Let us assume, moreover, that the deviations are identified at the control point most likely; consequently, the price deviations of direct raw materials are separated and tracked by the supply department and not by the production department. Calculate price and efficiency deviations under these conditions.

7.27 Deviations of raw materials and production work, standard costs. The following selective data are given on a production line of padded seats: Standard values per seat Direct raw materials Direct production work 2 m of raw material at $10 per m 0.5 hours of work at $20 per hour The following data were compiled on the actual results: actual production-20,000 units (chairs); raw materials purchased and used -37,000 m; raw material price - $10,20/m²; direct cost of production work $176,400; the actual number of hours of direct work - 9,000; direct labor price- $19.60/time. 1. Present the calculations of price and efficiency deviations of direct raw materials and direct production work. Provide a plausible explanation of the causes that caused these deviations. 2. Suppose that 60,000 m² of raw materials were bought (at the price of $10.20/mf), although only 37,000 m. Let us assume, moreover, that the deviations are identified at the control point most likely; consequently, the price deviations of direct raw materials are separated and tracked by the supply department and not by the production department. Calculate price and efficiency deviations under these conditions.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...

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