AMIS 212 Introductory Managerial Accounting

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MANAGEMENT ACCOUNTING

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Presentation transcript:

AMIS 212 Introductory Managerial Accounting Chapter 10 Module 5 CHAPTER 1 MODULE 1 AMIS 212 Introductory Managerial Accounting Professor Marc Smith

Chapter 10 Module 5: Example #2 Use the DM price variance since we are asked to calculate the amount of direct materials purchased DM Price Variance = (AQ x AP) - (AQ x SP) (35,000 x AP) - (35,000 x 4.00) = 7,000 35,000AP - 140,000 = 7,000 35,000AP = 147,000 AP = $4.20 per pound

Chapter 10 Module 5: Example #3 DL Rate Variance = (AH x AR) - (AH x SR) 300,760 - (36,500 x 8.20) 300,760 - 299,300 = $1,460 unfavorable ● Remember, (AH x AR) represents the total actual direct labor cost

Chapter 10 Module 5: Example #3 DL Efficiency Variance = (AH x SR) - (SH x SR) (36,500 x 8.20) - [(6,300 x 6) x 8.20) 299,300 - 309,960 = $10,660 favorable The total direct labor variance would be: 1,460 + -10,660 = 9,200 favorable

Chapter 10 Module 5: Example #3 Use the DM quantity variance since we are asked to calculate the amount of direct materials used DM Quantity Variance = (AQ x SP) - (SQ x SP) (AQ x 5.00) - [(6,300 x 8) x 5.00] = 9,000 5AQ - 252,000 = 9,000 5AQ = 261,000 AQ = 52,200 kilograms

Chapter 10 Module 5: Example #3 Use the DM price variance since we are asked to calculate the amount paid to purchase direct materials DM Price Variance = (AQ x AP) - (AQ x SP) (50,000 x AP) - (50,000 x 5.00) = -2,500 50,000AP - 250,000 = -2,500 50,000AP = 247,500 AP = $4.95 per kilogram