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ACC349 Week 5 P8-2A P11-4A

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P8-2A Bolus Computer Parts Inc. is in the process of setting a selling price on a new
component it has just designed and developed. The following cost estimates for this new
component have been provided by the accounting department for a budgeted volume of
50,000 units.

Per Unit Total
Direct materials $50
Direct labor $25
Variable manufacturing overhead $20
Fixed manufacturing overhead $600,000
Variable selling and administrative expenses $18
Fixed selling and administrative expenses $400,000

Bolus Computer Parts management requests that the total cost per unit be used in costplus
pricing its products. On this particular product, management also directs that the
target price be set to provide a 25% return on investment (ROI) on invested assets of

and so on ...

P11-4A Crede Manufacturing Company uses a standard cost accounting system. In
2005, 33,000 units were produced. Each unit took several pounds of direct materials and
11⁄3 standard hours of direct labor at a standard hourly rate of $12.00. Normal capacity
was 42,000 direct labor hours. During the year, 132,000 pounds of raw materials were
purchased at $0.90 per pound. All pounds purchased were used during the year.


(a) If the materials price variance was $3,960 unfavorable, what was the standard materials
price per pound?

(b) If the materials quantity variance was $2,871 favorable, what was the standard materials
quantity per unit?

(c) What were the standard hours allowed for the units produced?

(d) If the labor quantity variance was $8,400 unfavorable, what were the actual direct labor
hours worked?

(e) If the labor price variance was $4,470 favorable, what was the actual rate per hour?

(f) If total budgeted manufacturing overhead was $327,600 at normal capacity, what was
the predetermined overhead rate per direct labor hour?

(g) What was the standard cost per unit of product?

(h) How much overhead was applied to production during the year?

(i) If the standard fixed overhead rate was $2.50, what was the overhead volume variance?

(j) If the overhead controllable variance was $3,000 favorable, what were the total variable
overhead costs incurred? (Assume that the overhead controllable variance relates
only to variable costs.)

(k) Using selected answers above, what were the total costs assigned to work in process?

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