Albrecht 19.pdf - Marriott School

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EOC | Controlling Cost, Profit, and Investment Centers Chapter 19 995
P 19-51
LO2
Determining How Variances Are Computed
Helon Company uses a standard cost system in its accounting for the manufacturing costs of
its only product. The standard cost information for materials and labor is as follows:
Direct materials: 5 pounds at $7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35
Direct labor: 3 hours at $8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
During April of its first year of operation, the company completed 2,300 units and had
the following materials and labor variances:
Materials price variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Materials quantity variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Labor rate variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Labor efficiency variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,400 F
2,100 F
2,115 U
1,200 U
There was no work-in-process inventory at the beginning or end of April.
Required:
Compute the following amounts:
1. The amount of materials and labor debited to Work-in-Process Inventory during April.
2. The pounds of materials used in production.
3. The actual hours of labor used in production.
4. The actual labor rate per hour.
P 19-52
LO3
Evaluation of Profit Centers—Segment Margin
Della Brown is the manager of one of the stores in the nationwide EatRite supermarket
chain. The following information has been gathered about the performance of Della’s store
in the most recent quarter:
Contribution-
Operating Departments Revenue Margin Ratio
Groceries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $500,000 30%
Fresh produce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 40%
Dry goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000 35%
Fixed costs controllable by:
Manager of grocery department . . . . . . . . . . . . . . . . . . . . . . . . . . . $110,000
Manager of fresh produce department . . . . . . . . . . . . . . . . . . . . . . 75,000
Manager of dry goods department . . . . . . . . . . . . . . . . . . . . . . . . . 130,000
Store manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
Corporate headquarters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $465,000
Required:
Prepare a segment margin statement for corporate headquarters’ use in evaluating the store
manager, Della Brown, and which Della can use to evaluate the managers of the three departments
within the store.
P 19-53
LO3
Evaluation of Profit Centers—Segment Margin
Derrald Pearl Company has two divisions, Computer Consulting and Construction. During
the most recent year, the two divisions had the following operating data:
(continued)