Albrecht 19.pdf - Marriott School

76154_23_ch19_p942-1006.qxd 3/1/07 3:35 PM Page 992
992 Part 6 Control in a Management Accounting System | EOC
The following data are applicable to revenue in 2009:
Budget
Actual
Europe—software sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,000 $230,000
Asia—software sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000 130,000
Americas—software sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350,000 420,000
Europe—service contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000 90,000
Asia—service contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000 80,000
Americas—service contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000 190,000
Europe—consulting fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 90,000
Asia—consulting fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 35,000
Americas—consulting fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 60,000
Required:
1. Prepare a responsibility accounting report for the head of the Europe division. For each
of the three revenue sources (software sales, service contracts, and consulting fees),
show whether the variance between budget and actual is favorable or unfavorable.
2. Prepare a responsibility accounting report for the head of the entire company. The company
head wants to see only the overall results for each of the three geographic divisions
(budget versus actual); a detailed breakdown by revenue source is not requested.
P 19-45
LO2
Materials and Labor Variances
The standard cost data for Madison Machinery Company show the following costs for producing
one of its machines:
Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400 pounds at $8 = $3,200
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 hours at $15 = $2,250
During April, four machines were built, with actual total costs as follows:
Materials purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 pounds at $8.20 = $16,400
Materials used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,700 pounds
Direct labor incurred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625 hours at $14.80 = $9,250
Required:
1. Compute the following variances:
a. Materials price variance (raw materials inventory is carried at standard cost)
b. Materials quantity variance
c. Labor rate variance
d. Labor efficiency variance
2. Record the standard materials and labor costs in Work-in-Process Inventory, and enter
the variances in appropriate journal entries.
P 19-46
LO2
Materials and Labor Variances
Mayhem Manufacturing provides the following standard cost data for one of its products:
Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15 feet at $3.00 per foot
2 hours at $12.50 per hour
During the month of February, the following actual cost data were accumulated:
Materials purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000 feet at $2.85 per foot
Materials used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,750 feet
Direct labor incurred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,000 hours at a total cost of $215,560
Units produced . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,800 units
(continued)