SIMs

Question 1

Labor Efficiency variance

Answer 1

(Std hours - Act hours) x Std price

Question 2

Variable OH spending variance

Answer 2

(Std price x Act total quantity)

Question 3

Materials Usage variance

Answer 3

(Std quantity - Act quantity) x Std price

Question 4

Materials Price Variance

Answer 4

(Std price - Act price) x Act quantity

Question 5

Labor rate variance

Answer 5

(Act Labor price - Std labor price) x Actual Hours

Question 6

VC I.S.

Answer 6

Sales Rev
(COGS: VC)
(Variable Selling & admin)
Cont Marg
(Fixed Selling & admin)
**(Fixed OH)
Operating Income

**Fixed OH - To determine, take PRODUCT COSTS (from Absorption statement) and DIVIDE by UNITS PRODUCED…then subtract that number from VC per unit…this gives FIXED OH cost per unit. Take that number and multiply by UNITS PRODUCED.

Ending Inv is simply (units produced - units sold) x VC per unit

Question 7

OH applied to WIP

Answer 7

ACTUAL OH Cost driver x predetermined rate

Question 8

NRV

Answer 8

Sales Value: S.P. x Q PRODUCED
Sales Value at split-off: ALWAYS $$$0000000
Sep Costs: (Given) =
NRV

Then do allocation ratio and joint cost allocation from there.

Question 9

RELATIVE SALES VALUE METHOD

Answer 9

Sales Value at split-off: Given
Everything else is ‘0’.

Allocation ratio is pulled from the SV at split-off and joint costs are allocated from there

Question 10

Absorption IS

Answer 10

Sales
(COGS: DM+Var Man Costs + Fixed Man Cost per unit ((Tot Fix Costs / Units sold)))
Gross Profit
(Selling and admin fixed)
(Selling and admin variable ((price per unit x’s units sold)))
Net Income

Diff between Absorp and VC: