P.1 The cost formula for the maintenance department of Rainbow. Ltd., is $19,400 per month plus $7.7 per machine hour used by the production department.
Required:
a. Calculate the maintenance cost that would be budgeted for a month in which 6,700 machine hours are planned to be used.
b. Prepare an appropriate performance report for the maintenance department assuming that 7,080 machine hours were actually used in the month of June and that total maintenance cost incurred was $68,920.
P 2. For the stamping department of a manufacturing firm, the standard cost for direct labor is $10 per hour, and the production standard calls for 2,490 stamping per hour. During June, 112 hours were required for actual production of 253,980 stamping. Actual direct labor cost of the stamping department for June was $1,029.
Required:
a. Complete the following performance  repot for June:
b. Calculate the direct labor efficiency and rate variance for June.
P 3. kerman’s Garage uses standards to plan and control labor time and expense. The standard time for an engine tune-up is 3.5 hours, and the standard labor rate is $16 per hour. Last week, 23 tune-ups were completed. The labor efficiency variance was 10 hours unfavorable, and the labor rate variance totaled $84 favorable.
(a)Calculate the actual direct labor hourly rate paid for tune-up work last week. (Do not round intermediate calculations and round your answer to 2 decimal places. Omit the “$” sign in your response.)
 (b) Calculate the dollar amount of the labor efficiency variance. (Input the amount as positive value. Do not round intermediate calculations. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance).Omit the “$” sign in your response.)

P 4. Fiberworks Company is a manufacture of fiberglass toy boats. The company has recently implemented a standard cost system and has designed the system to isolate variance as soon as possible. During the month of August, the following results were reported for the production of 25,000 toy boats:
Required:
a. Calculate the actual cost per pound of fiberglass purchased during August.
b. Calculate the direct materials purchased price variance for August.
c. Calculate the direct materials usage variance for August.

P 5. Vogel Co. Produces three models of heating and air conditioning thermostat components. The following table summarizes data about each model:
b. Calculate the effect on total company net income if the MV12 model were discontinued.
c. Calculate the contribution margin ratio for each model.
P 6. The central Division of American, Inc. has operating income of $15,100 on sales revenue of $158,000. Divisional operating assets are $84,100 and management of American has determined that a minimum return of 13% should be expected from all investment.
Required:
a. Using the DuPont model, calculate The Central Division’s margin, turnover, and ROI.
b. Calculate The Central Division’s residual income.

H.1 The standard for one case Springfever Tonic are:
Direct material                                                                            5.1 Ibs.   @  $4.1/Ib        =     $ 20.91
Direct labor                                                                                  4.1  hrs   @  $12/hr       =            49.2
Variable overhead (based on direct labor hours)                 4.1  hrs   @  $5.1/hr       =         20.91

During the week ended march 28,the following activity took price:
16,500 Ibs. Of raw material were purchased for inventory at a cost of $4.05 per pound.
3,000 cases of finished product were produced.
15,650 Ibs. Of raw material were used.
12,250 direct labor hours were worked at a  total cost of $153,000.
$67,375 of actual variable overhead costs were incurred.

Required:
Calculate each of the following variance

H.2 The standard for one case of liquid weed killer are:
Direct material                                                                 8 Ibs.  @ $9.75/Ib.
Direct labor                                                                   4.7 hrs.  @ $20.8/hr.
Variable overhead (based on machine hours)        1.6 hrs.  @ 7.15/hr.
During the week ended August 6, the following activity took price:
5,198 machine hours were worked.
27.634 Ibs. Of raw material were purchased for inventory at a total cost of $274,958.
3,420 cases of finished product were produce.
27,219 Ibs. Of raw material were used.
15,720 labor hours were worked at an average rate of $21.13per hour.
$35,866 actual variable overhead costs were incurred.
Required:
Calculate each of the following variance.

H.3 The Foster Insurance company developed standard times for processing claims. When a claim was received at the processing center, it was first reviewed and classified as sample or complex. The standard time for processing was:
Employees were expected to be productive 7.5 hours per day. Compensation costs were $94 per day per employee. During July, which had  21 working days, the following number of claims were processed:
Required:
a. Calculate the number of workers that should have been available to process July claims.
b. Assume that 37 workers were actually available throughout the month of July. Calculate a labor efficiency variance expressed as both a number of workers and a dollar amount for the month.
H.4 Pioneer State Bank developed a standard for teller staffing that provided for one teller to handle 15 customers per hour. During April, the bank averaged 52 customers per hour and had six tellers on duty at all times. (Relief tellers filled in during lunch and rest breaks.) the teller compensation cost is $13 per hour. The bank is open eight hours a day and there were 24 working days during April.
Requirement 1:
Calculate the teller efficiency variance during April expressed in terms of number of tellers and cost per hour.
Requirement 2:
Now assume that in April, during the 11:00 A.M to 1:00 P.M period every day, the bank served an average of 79 customer per hour. During the other six hours of the day, an average per hour were served.
a. Calculate a teller efficiency variance for the 11:00 to 1:00 period expressed in terms of number of tellers per hour and total cost for the month.
b. Calculate a teller efficiency variance for the other six hours of the day expressed in terms of number of tellers per hour and total cost for the month.

H.5 Silverstone's production budget for March called for making 38,500 units of a single product. The firm's production standards allow one-quarter of a machine hour per unit produced. The fixed overhead budget for March was $33,880. Silverstone uses an absorption costing system. Actual activity and costs for March were:
Units produced 35,820
Fixed overhead costs incurred $ 37,000
Calculate the predetermined fixed overhead application rate that would be used in March.
Calculate the number of machine hours that would be allowed for actual March production.
Calculate the fixed overhead applied to work in process during March.
Calculate the over- or underapplied fixed overhead for March.
Calculate the fixed overhead budget and volume variances for March
H.6 Presented here are the original overhead budget and the actual costs incurred during July for Rembrant, Inc. Rembrant's managers relate overhead to direct labor hours for planning, control, and product costing purposes. The original budget is based on budgeted production of 28,700 units in 4,100 standard direct labor hours. Actual production of 35,700 units required 4,400 actual direct labor hours
                                                                         Original Budget                           Actual Cost

variable overhead                                               $ 45,920                              $   33,700
Fixed overhead                                                       36,900                                   37,700
Required:
a. Calculate the flexed budget allowanced  for variable and fixed overhead for July.
b. Calculate the direct labor efficiency variance for July expressed in terms of direct labor hours.
c. Calculate the predetermined overhead application rate for both variable and fixed overhead for July.

d. Calculate the fixed and variable overhead applied to production during July if overhead is applied on the basis of standard hours allowed for actual production achieved.

e. Calculate the fixed overhead budget and volume variances for July.
f. Calculate the over or under applied fixed overhead for July.

E.16 Val's travel budget for October was $720, based on her plan to drive 3,000 miles at a cost of $0.24 per mile. During October, she actually drove 2,800 miles at a total cost of $700. A flexed budget performance report would show a variance of:
a. $50 F
b. $20 F
c.$28 U
d. $30 U

E.38 April Corporation developed the following per-unit standards for its product: 2 pounds of direct materials at $3.75 per pound. Last month, 2,000 pounds of direct materials were purchased for $7,600. The direct materials price variance for last month was:
a. $3,800 favorable.
b.$200 favorable.
c. $100 unfavorable.
d. $200 unfavorable

E.40  Rocky Mountain Manufacturing produces a single product. The original budget for November was based on expected production of 18,200 units; actual production for November was 15.652 units. The original budget and actual costs incurred for the manufacturing department follow:
                                                                          Original Budget              Actual Costs
Direct Materials                                                 $291,200                       $259,115
Direct labor                                                          200,200                          176,272
Variable Overhead                                              111,020                            91,253
Fixed Overhead                                                       85,400                           86,618
Total                                                                       $687,820                      $613,258

Required:
Prepare an appropriate performance report for the manufacturing department.

E.41 The president of Truman, Inc., attended a seminar about the contribution margin model and returned to her company full of enthusiasm about it. She requested that last year’s traditional model income statement be revised, and she received the following report:
 
                                                                                             Division
                                                      Total Company                 A                             B                            C
Sales                                                      $105,000              $41,000                $26,000                   $38,000  
Variable expenses                                  $63,000              $23,000                $20,000                   $20,000  
Contribution margin                               $42,000              $18,000                  $6,000                   $18,000  
Fixed expenses                                       $27,000                  9,000                   11,000                      7,000  
Net income (loss)                                    $15,000                $9,000                  $(5,000)                 $11,000  
 
 The president was told that the fixed expenses of $27,000 included $18,000 that had been split evenly between divisions because they were general corporate expenses. After looking at the statement, the president exclaimed, “I knew it! Division B is a drag on the whole company. Close it down!”
 
Required:
(a)          Evaluate the president's remark.
 (b)         Calculate what the company's net income would be if Division B were closed down.
(c)           What is the policy statement related to the allocation of fixed expenses.

(a) Evaluate the president's remark.
 a.The president's remark ignores the misleading result of arbitrarily allocated fixed expenses.
 b.The president's remark ignores the misleading result of arbitrarily allocated variable expenses.

(b) Calculate what the company's net income would be if Division B were closed down. (Omit the “$” sign in your response.)
Net income without Division B $10000   
(c) What is the policy statement related to the allocation of fixed expenses.
    a. Never arbitrarily allocate fixed expenses
    b. Never arbitrarily allocate variable expenses

E.42  The standard for one case of Liquid weed killer are:
Direct material                                                               6Ibs.   @   $7.5/Ib.
Direct labor                                                                   3.6 hrs. @   $16/hr.
Variable overhead (based on machine hours)        1.2 hrs.   @ $5.5/hr.
During the week ended August 6, the following activity took place:
5,198 machine hours were worked.
27,634 Ibs. Of raw material were purchased for inventory at a total cost of $211,400
4,560 cases of finished product were produced.
27,219 Ibs. Of raw material were used.
16,055 labor hours were worked at an average rate of $16.25 per hour.
$27,601 actual variable overhead costs were incurred.
               
Required:
Calculate each of the following variance