Geneva Corporation

1 Calculate the following and indicate if each variance is favorable or unfavorable.

a. Material Price Variance

(AP x AQ) (10.50 x 9500 lbs) 99750
(SP x AQ) (10.00 x 9500 lbs) 95000
(4750) Unfavorable

b. Material Quantity Variance

(SP x AQ) (10.00 x 9500 lbs) 95000
(SP x SQ) (10.00 x 5lbs x 1800units) 90000
(5000) Unfavorable

c. Labor rate variance

(AP x AQ) (40.80 x 3700 hrs) 150960
(SP x AQ) (40.00 x 3700 hrs) 148000
(2960) Unfavorable

d. Labor efficiency variabce

(SP x AQ) (40.00 x 3700 hrs) 148000
(SP x SQ) (40.00 x 2hrs x 1800 units) 144000
(4000) Unfavorable

e. Total Overhead Variance

Variable Overhead Spending Variance (2000) Unfavorable
Variable Overhead Efficiency Variance 12000 Favorable
Fixed Overhead Spending Variance (11000) Unfavorable
Production Volume Variance 6000 Favorable
5000 Favorable

f. Variable Overhead Spending Variance

(AP x AQ) Cost incurred 110000
(SP x AQ) (30.00 x 2hrs x 1800units) 108000
(2000) Unfavorable

g. Variable Overhead Efficiency Variance

(SP x AQ) (30.00 x 2hrs x 1800units) 108000
 (SP x SQ) (30.00 x 4000 hrs) 120000
12000 Favorable

h. Fixed Overhead Spending Variance

(AP x AQ) Cost incurred 65000
(SP x AQ) (15 x 2hrs x 1800units) 54000
(11000) Unfavorable

i. Production Volume Variance

(SP x AQ) (15 x 2hrs x 1800units) 54000
(SP x SQ) (15.00 x 4000 hrs) 60000
6000 Favorable

2 Prepare the necessary journal entries to record the following:

a. Purchase of Materials
Raw Materials Inventory 95000
Material Purchase Price Variance 4750
Accounts Payable 99750

b. Issuance of Materials to production

Work in Process Inventory 90000
Material Quantity Variance 5000
Raw Materials Inventory 95000

c. To accrue payroll
Work in Process Inventory 144000
Labor Rate Variance 4000
Wages Payable 148000

d. To distribute Payroll
Wages Payable 148000
Labor Efficiency Variance 2960
Cash 150960

e. Incurrence of actual variable and fixed overhead costs

Variable Manufacturing Overhead 110000
Fixed Manufacturing Overhead 65000
Various Accounts 175000
 f. Applied Variable Overhead
Work in Process Inventory 120000
Variable Manufacturing Overhead 120000

g. Applied Fixed Overhead

Work in Process Inventory 60000
Fixed Manufacturing Overhead 60000

h. Variable Overhead Variance

Variable Spending Variance 2000
Variable Manufacturing Overhead 10000
Variable Efficiency Variance 12000

i. Fixed Overhead Variance

Fixed Spending Variance 11000
Fixed Manufacturing Overhead 5000
Volume Variance 6000

3 Compute the gross profit based on Standard Costs

Sales 750000
Cost of Goods Sold
Direct Materials 90000
Direct Labor 144000
Variable Overhead 120000
Fixed Overhead 60000 (414000)
Gross Profit 336000
unfavorable.
Copenhagen Company

(A) One-variance Analysis: Actual Applied

Variable Overhead 430000 372000
Fixed Overhead 900000 930000
1330000 1302000

Total Overhead Variance (28000) Unfavorable

(B) Two-variance analysis: Actual Budgeted Applied

Variable Overhead 430000 372000 372000
Fixed Overhead 900000 960000 930000
1330000 1332000 1302000

Controllable Variance 2000 Favorable

Uncontrollable Variance (30000) Unfavorable
Total Overhead variance (28000) Unfavorable

(C ) Three-variance analysis: Budgeted Budgeted

Actual
(Actual Input) (Actual Output)
Variable Overhead 430000 288000 372000
Fixed Overhead 900000 960000 960000
1330000 1248000 1332000

Overhead Spending Variance (82000) Unfavorable

Efficiency Variance 84000 Favorable
Overhead Volume Variance (30000) Unfavorable
Total Overhead Variance (28000) Unfavorable

(D) Four-variance analysis Budgeted Budgeted

Actual
(Actual Input) (Actual Output)
Variable Overhead 430000 288000 372000
Fixed Overhead 900000 960000 930000
1330000 1248000 1302000

Spending Variance (82000) Unfavorable

Efficiency Variance 54000 Favorable
Total Overhead Variance (28000) Unfavorable
Applied
372000
930000
1302000