Costs associated with two alternatives, code named Q and R, being considered by Corniel Corporation are listed below:
| Alternative Q | Alternative R | |||
| Supplies costs | $ | 77,000 | $ | 68,000 |
| Power costs | $ | 49,000 | $ | 49,000 |
| Inspection costs | $ | 29,000 | $ | 44,000 |
| Assembly costs | $ | 42,000 | $ | 31,000 |
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| Required: |
| a. |
Which costs are relevant and which are not relevant in the choice between these two alternatives? |
| Supplies costs | |
| Power costs | |
| Inspection costs | |
| Assembly costs | |
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| b. |
What is the differential cost of Alternative R over Alternative Q? (Negative amount should be indicated by a minus sign. Omit the “$” signs in your response.) |
| Differential cost | $ |
Part 5
Silmon Corporation makes a product with the following standard costs:
| Inputs | Standard Quantity or Hours |
Standard Price or Rate |
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| Direct materials | 4.3 | grams | $ | 7.00 | per gram |
| Direct labor | 0.5 | hours | $ | 14.00 | per hour |
| Variable overhead | 0.5 | hours | $ | 4.00 | per hour |
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In June the company produced 4,800 units using 21,890 grams of the direct material and 2,520 direct labor hours. During the month the company purchased 24,700 grams of the direct material at a price of $6.80 per gram. If materials used are more than the materials purchased, the additional amount is taken from inventory. The actual direct labor rate was $14.60 per hour and the actual variable overhead rate was $3.90 per hour. The materials price variance is computed when materials are purchased. Variable overhead is applied on the basis of direct labor hours. |
| Required: |
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Compute the following variances for raw materials, direct labor, and variable overhead, assuming that the price variance for materials is recognized at point of purchase: (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank be certain to enter “0” wherever required. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Omit the “$” sign in your response.) |
Favor or Unfavorable
| a. | Direct materials quantity variance | $ | |
| b. | Direct materials price variance | $ | |
| c. | Direct labor efficiency variance | $ | |
| e. | Direct labor rate variance | $ | |
| d. | Variable overhead efficiency variance | $ | |
| f. | Variable overhead rate variance | $ |