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Problem 17-46 (Static) Variable Cost Variances: Materials Purchased and Used Are Not Equal (LO 17-2, 7) Larned Company makes a storage box using metal. The company uses a standard costing system. Variable overhead is allocated on the basis of direct material usage (pounds) Overhead is allocated to units based on expected production of 13,500 units. Larned maintains a materials inventory, so the amount of material used is not necessarily the same as the amount of material purchased in any one month. The standard cost sheet for a single box follows: Direct material Direct labor Variable overhead Fixed overhead 0.5 pound $8 9.2 hours $30 0.5 pound 54 March financial results show that the average purchase price of metal was $8.20 per pound. The purchase price variance was $1,540 The variable overhead efficiency variance was $1.200 favorable Good output produced totaled 12,000 units. a Metals purchased Efficiency variance Metals used Required: a. How many pounds of metal were purchased in March? b. What was the direct materials efficiency variance in March? Note: Indicate the effect of this variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. c. How many pounds of metal were used in March? $ 4.00 6.00 2.00 13.00 $15.00 pounds pounds

Problem 17-46 (Static) Variable Cost Variances: Materials Purchased and Used Are Not Equal (LO 17-2, 7) Larned Company makes a storage box using metal. The company uses a standard costing system. Variable overhead is allocated on the basis of direct material usage (pounds) Overhead is allocated to units based on expected production of 13,500 units. Larned maintains a materials inventory, so the amount of material used is not necessarily the same as the amount of material purchased in any one month. The standard cost sheet for a single box follows: Direct material Direct labor Variable overhead Fixed overhead 0.5 pound $8 9.2 hours $30 0.5 pound 54 March financial results show that the average purchase price of metal was $8.20 per pound. The purchase price variance was $1,540 The variable overhead efficiency variance was $1.200 favorable Good output produced totaled 12,000 units. a Metals purchased Efficiency variance Metals used Required: a. How many pounds of metal were purchased in March? b. What was the direct materials efficiency variance in March? Note: Indicate the effect of this variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. c. How many pounds of metal were used in March? $ 4.00 6.00 2.00 13.00 $15.00 pounds pounds

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter9: Evaluating Variances From Standard Costs
Section: Chapter Questions
Problem 7E: H.J. Heinz Company uses standards to control its materials costs. Assume that a batch of ketchup...
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3 Problem 17-46 (Static) Variable Cost Variances: Materials Purchased and Used Are Not Equal (LO 17-2, 7) Larned Company makes a storage box using metal. The company uses a standard costing system. Variable overhead is allocated on the basis of direct material usage (pounds) Overhead is allocated to units based on expected production of 13,500 units Larned maintains a materials inventory, so the amount of material used is not necessarily the same as the amount of material purchased in any one month. The standard cost sheet for a single box follows: 0.5 pound $8 0.2 hours $30 0.5 pound @ $4 Direct material Direct labor Variable overhead Fixed overhead March financial results show that the average purchase price of metal was $8.20 per pound. The purchase price variance was $1,540. The variable overhead efficiency variance was $1.200 favorable. Good output produced totaled 12,000 units. Required: a. How many pounds of metal were purchased in March? b. What was the direct materials efficiency variance in March? Note: Indicate the effect of this variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. c. How many pounds of metal were used in March? a Metals purchased b. Efficiency variance Metals used $4.00 6.00 2.00 3.00 $15.00 pounds pounds
Transcribed Image Text:3 Problem 17-46 (Static) Variable Cost Variances: Materials Purchased and Used Are Not Equal (LO 17-2, 7) Larned Company makes a storage box using metal. The company uses a standard costing system. Variable overhead is allocated on the basis of direct material usage (pounds) Overhead is allocated to units based on expected production of 13,500 units Larned maintains a materials inventory, so the amount of material used is not necessarily the same as the amount of material purchased in any one month. The standard cost sheet for a single box follows: 0.5 pound $8 0.2 hours $30 0.5 pound @ $4 Direct material Direct labor Variable overhead Fixed overhead March financial results show that the average purchase price of metal was $8.20 per pound. The purchase price variance was $1,540. The variable overhead efficiency variance was $1.200 favorable. Good output produced totaled 12,000 units. Required: a. How many pounds of metal were purchased in March? b. What was the direct materials efficiency variance in March? Note: Indicate the effect of this variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. c. How many pounds of metal were used in March? a Metals purchased b. Efficiency variance Metals used $4.00 6.00 2.00 3.00 $15.00 pounds pounds
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