Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

تمرين 11

Heritage Furniture Co. uses a standard cost system. One of the company's most popular products is an oak entertainment center that looks like an old icebox but houses a television, stereo, or other electronic components. The per-unit standard costs of the entertainment center, assuming a "normal" volume of 1,000 units per month, are as follows:
During July. 800 entertainment centers were scheduled and produced at the following actual unit costs:
Instructions
a. Compute the following cost variances for the month of July:
1. Materials price variance
2. Materials quantity variance
3. Labor rate variance
4. Labor efficiency variance
5. Overhead spending variance
6. Volume variance
b. Prepare journal entries to assign manufacturing costs to the Work in Process Inventory account and to record cost variances for July. Use separate entries for ( 1 ) direct materials. ( 2 ) direct labor and ( 3 ) overhead costs,
c. Comment on any significant problems or areas of cost savings revealed by your computation of cost variances. Also comment on any possible causal relationships between significant favorable and unfavorable cost variances.