Instructions to Students:
Please complete the 3 problems below in Excel
Each question is worth 50 points.
1. Roadmaster Tire Co. manufactures automobile tires. Standard costs and actual costs for
direct materials, direct labor, and factory overhead incurred for the manufacture of 5,500 tires
were as follows:
Standard Costs Actual Costs
Direct Materials 82,000 lbs. at $5.10 82,600 lbs. at $5.25
Direct Labor 1,650 hrs. at $17.50 1,620 hrs. at $17.40
Factory Overhead Rates per direct labor hr.,
based on 100% of normal
capacity of 1,500 direct
labor hrs.:
Variable cost, $3.10 $5,000 variable cost
Fixed cost, $4.90 $7,350 fixed cost
Each tire requires 0.30 hours of direct labor.
Determine
a) The Direct materials price variance
b) The Direct materials quantity variance
c) Total direct materials cost variance
d) The Direct Labor rate variance
e) The Direct Labor time variance
f) Total direct labor cost variance
g) Variable Factory Overhead Controllable variance
h) Fixed Factory Overhead volume variance
i) Total Factory Overhead cost variance
2. The budget director of Hi Performance Athletic Co., with the assistance of the controller,
treasurer, production manager, and sales manager, has gathered the following data for use in
developing the budgeted income statement for January 2012:
a. Estimated sales for January:
Batting helmet 305 units at $70 per unit
Football helmet 630 units at $135 per unit
b. Estimated inventories at January 1:
Direct Materials: Finished products:
Plastic 80 lbs Batting helmet 35 units at $40 per unit
Foam lining 60 lbs Football helmet 40 units at $60 per unit
c. Desired inventories at January 31:
Direct Materials: Finished products:
Plastic 90 lbs Batting helmet 30 units at $40 per unit
Foam lining 55 lbs Football helmet 50 units at $58 per unit
d. Direct materials used in production:
In manufacture of batting helmet:
Plastic 1.20 lbs. per unit of product
Foam lining 0.50 lb. per unit of product
In manufacture of football helmet:
Plastic 2.80 lbs. per unit of product
Foam lining 1.40 lb. per unit of product
e. Anticipated cost of purchases and beginning and ending inventory of direct materials:
Plastic $5.50 per lb.
Foam lining $4.00 per lb.
f. Direct labor requirements:
Batting helmet:
Molding Department 0.20 hr. at $15 per hr.
Assembly Department 0.50 hr. at $13 per hr. 4
Football helmet:
Molding Department 0.30 hr. at $15 per hr.
Assembly Department 0.65 hr. at $13 per hr.
g. Estimated factory overhead costs for January:
Indirect factory wages 14,500 Power and light 2,000
Depreciation of plant and equipment 4,200 Insurance and property tax 1,700
h. Estimated operating expenses for January:
Sales salaries expense 15,400
Advertising expense 8,500
Office salaries expense 11,500
Depreciation expense- office equipment 3,200
Telephone expense- selling 950
Telephone expense- administrative 600
Travel expense- selling 2,300
Office supplies expense 550
Miscellaneous administrative expense 400
i. Estimated other income and expense for January:
Interest revenue 140
Interest expense 172
j. Estimated tax rate: 30%
Prepare:
a) A sales budget for January.
b) A production budget for January.
c) A direct materials purchases budget for January.
d) A direct labor cost budget for January.
e) A factory overhead cost budget for January.
f) A cost of goods sold budget for January.
Work in process at the beginning of January is estimated to be $12,500.
Work in process at the end of January is desired to be $13,500.
g) A selling and administrative expenses budget for January.
h) A budgeted income statement for January.
3. During the first month of operations ended September 30, 2012, Sungsam Inc. manufactured
3,200 flat panel televisions, of which 3,000 were sold. Operating data for the month are
summarized as follows:
Sales 4,275,000
Manufacturing costs:
Direct materials 1,680,000
Direct labor 720,000
Variable manufacturing
overhead 272,000
Fixed manufacturing cost 505,600 3,177,600
Selling and administrative expenses:
Variable 408,000
Fixed 195,000 603,000
Prepare:
a) An income statement based on the absorption costing concept.
b) An income statement based on the variable costing concept.
