Carol Morgan manages the production division of Walton Corporation. Ms. Morgan's responsibility report for the month of August follows: Controllable costs Raw materials Labor Maintenance Supplies Total Budget $ 18,900 9,672 3,500 2,258 $ 34,322 The budget had called for 4,500 pounds of raw materials at $4.20 per pound, and 4,500 pounds were used during August, however, the purchasing department paid $5.20 per pound for the materials. The wage rate used to establish the budget was $18.60 per hour. On August 1, however, it increased to $21.60 as the result of an inflation index provision in the union contract. Furthermore, the purchasing department did not provide the materials needed in accordance with the production schedule, which forced Ms. Morgan to use 100 hours of overtime at a $32.40 rate. The projected 520 hours of labor in the budget would have been sufficient had it not been for the 100 hours of overtime. In other words, 620 hours of labor were used in August. Actual $ 23,488 14,472 5,100 1,108 $ 44,072 Required When confronted with the unfavorable variances in her responsibility report, Ms. Morgan argued that the report was unfair because it held her accountable for materials and labor variances that she did not control. Is she correct? b. Calculate the variances of the items Ms. Morgan controlled during the period. Required B Total Complete this question by entering your answers in the tabs below. Variance $ 4,508 Unfavorable 4,880 Unfavorable 1,688 Unfavorable 1,150 Favorable $ 9,758 Unfavorable Required A Calculate the variances of the items Ms. Morgan controlled during the period. Note: Indicate the effect of each variance by selecting favorable, unfavorable, or "None" for no effect (i.e., zero variance). Variances < Required A Required B >
Carol Morgan manages the production division of Walton Corporation. Ms. Morgan's responsibility report for the month of August follows: Controllable costs Raw materials Labor Maintenance Supplies Total Budget $ 18,900 9,672 3,500 2,258 $ 34,322 The budget had called for 4,500 pounds of raw materials at $4.20 per pound, and 4,500 pounds were used during August, however, the purchasing department paid $5.20 per pound for the materials. The wage rate used to establish the budget was $18.60 per hour. On August 1, however, it increased to $21.60 as the result of an inflation index provision in the union contract. Furthermore, the purchasing department did not provide the materials needed in accordance with the production schedule, which forced Ms. Morgan to use 100 hours of overtime at a $32.40 rate. The projected 520 hours of labor in the budget would have been sufficient had it not been for the 100 hours of overtime. In other words, 620 hours of labor were used in August. Actual $ 23,488 14,472 5,100 1,108 $ 44,072 Required When confronted with the unfavorable variances in her responsibility report, Ms. Morgan argued that the report was unfair because it held her accountable for materials and labor variances that she did not control. Is she correct? b. Calculate the variances of the items Ms. Morgan controlled during the period. Required B Total Complete this question by entering your answers in the tabs below. Variance $ 4,508 Unfavorable 4,880 Unfavorable 1,688 Unfavorable 1,150 Favorable $ 9,758 Unfavorable Required A Calculate the variances of the items Ms. Morgan controlled during the period. Note: Indicate the effect of each variance by selecting favorable, unfavorable, or "None" for no effect (i.e., zero variance). Variances < Required A Required B >
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead
Section: Chapter Questions
Problem 9P: USD Inc. has established the following standard cost per unit:
Although 10,000 units were budgeted,...
Related questions
Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Topic Video
Question
Transcribed Image Text:Carol Morgan manages the production division of Walton Corporation. Ms. Morgan's responsibility report for the month of August
follows:
Controllable costs
Raw materials
Labor
Maintenance
Supplies
Total
Required A
Budget
$ 18,900
9,672
3,500
2,250
$ 34,322
The budget had called for 4,500 pounds of raw materials at $4.20 per pound, and 4,500 pounds were used during August; however,
the purchasing department paid $5.20 per pound for the materials. The wage rate used to establish the budget was $18.60 per hour.
On August 1, however, it increased to $21.60 as the result of an inflation index provision in the union contract. Furthermore, the
purchasing department did not provide the materials needed in accordance with the production schedule, which forced Ms. Morgan to
use 100 hours of overtime at a $32.40 rate. The projected 520 hours of labor in the budget would have been sufficient had it not been
for the 100 hours of overtime. In other words, 620 hours of labor were used in August.
Required
a. When confronted with the unfavorable variances in her responsibility report, Ms. Morgan argued that the report was unfair because
it held her accountable for materials and labor variances that she did not control. Is she correct?
b. Calculate the variances of the items Ms. Morgan controlled during the period.
Complete this question by entering your answers in the tabs below.
Required B
Total
Actual
$ 23,400
14,472
5,100
1,100
$ 44,072
Variance
$4,500 Unfavorable
4,800 Unfavorable
1,600 Unfavorable
1,150 Favorable
$ 9,750 Unfavorable
Calculate the variances of the items Ms. Morgan controlled during the period.
Note: Indicate the effect of each variance by selecting favorable, unfavorable, or "None" for no effect (i.e., zero variance).
Variances
< Required A
Required B >
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College