BE23-1 Perez Company uses both standards and budgets. For the year, estimated production

of Product X is 500,000 units. Total estimated cost for materials and labor are

$1,300,000 and $1,700,000. Compute the estimates for (a) a standard cost and (b) a budgeted

cost.

BE23-2 Tang Company accumulates the following data concerning raw materials in

making one gallon of finished product: (1) Price—net purchase price $2.30, freight-in

$0.20, and receiving and handling $0.10. (2) Quantity—required materials 3.6 pounds,

allowance for waste and spoilage 0.4 pounds. Compute the following.

(a) Standard direct materials price per gallon.

(b) Standard direct materials quantity per gallon.

(c) Total standard materials cost per gallon.

BE23-3 Labor data for making one gallon of finished product in Tang Company are as

follows: (1) Price—hourly wage rate $13.00, payroll taxes $0.80, and fringe benefits $1.20.

(2) Quantity—actual production time 1.1 hours, rest periods and cleanup 0.25 hours, and

setup and downtime 0.15 hours. Compute the following.

(a) Standard direct labor rate per hour.

(b) Standard direct labor hours per gallon.

(c) Standard labor cost per gallon.

BE23-4 Simba Company’s standard materials cost per unit of output is $10 (2 pounds

3 $5). During July, the company purchases and uses 3,200 pounds of materials costing

$16,192 in making 1,500 units of finished product. Compute the total, price, and quantity

materials variances.

BE23-5 Hartley Company’s standard labor cost per unit of output is $22 (2 hours 3 $11

per hour). During August, the company incurs 2,100 hours of direct labor at an hourly cost

of $10.80 per hour in making 1,000 units of finished product. Compute the total, price,

and quantity labor variances.

BE23-7 The four perspectives in the balanced scorecard are (1) financial, (2) customer,

(3) internal process, and (4) learning and growth. Match each of the following objectives

with the perspective it is most likely associated with: (a) Plant capacity utilization. (b)

Employee work days missed due to injury. (c) Return on assets. (d) Brand recognition.

E23-1 Shannon Company is planning to produce 2,000 units of product in 2014. Each

unit requires 3 pounds of materials at $5 per pound and a half-hour of labor at $15 per

hour. The overhead rate is 70% of direct labor.

Instructions

(a) Compute the budgeted amounts for 2014 for direct materials to be used, direct labor,

and applied overhead.

(b) Compute the standard cost of one unit of product.

(c) What are the potential advantages to a corporation of using standard costs?

E23-4 Monte Services, Inc. is trying to establish the standard labor cost of a typical oil

change. The following data have been collected from time and motion studies conducted

over the past month.

Actual time spent on the oil change 1.0 hour

Hourly wage rate $12

Payroll taxes 10% of wage rate

Setup and downtime 20% of actual labor time

Cleanup and rest periods 30% of actual labor time

Fringe benefits 25% of wage rate

Instructions

(a) Determine the standard direct labor hours per oil change.

(b) Determine the standard direct labor hourly rate.

(c) Determine the standard direct labor cost per oil change.

(d) If an oil change took 1.6 hours at the standard hourly rate, what was the direct labor

quantity variance?

E23-5 The standard cost of Product B manufactured by MIT Company includes three

units of direct materials at $5.00 per unit. During June, 29,000 units of direct materials

are purchased at a cost of $4.70 per unit, and 29,000 units of direct materials are used to

produce 9,500 units of Product B.

Instructions

(a) Compute the total materials variance and the price and quantity variances.

(b) Repeat (a), assuming the purchase price is $5.15 and the quantity purchased and used

is 28,000 units.

E23-6 Lewis Company’s standard labor cost of producing one unit of Product DD is

4 hours at the rate of $12.00 per hour. During August, 40,600 hours of labor are incurred

at a cost of $12.15 per hour to produce 10,000 units of Product DD.

Instructions

(a) Compute the total labor variance.

(b) Compute the labor price and quantity variances.

(c) Repeat (b), assuming the standard is 4.1 hours of direct labor at $12.25 per hour.