Concept explainers
Flexible-
At the beginning of 2017, DDC budgeted annual production of 420,000 doorknobs and adopted the following standards for each doorknob:
Input | Cost/Doorknob | |
Direct materials (brass) | 0.3 lb. @ $10/lb. | $ 3.00 |
Direct manufacturing labor | 1.2 hours @ $17/hour | 20.40 |
Manufacturing overhead: | ||
Variable | $5/lb. × 0.3 lb. | 1.50 |
Fixed | $15/lb. × 0.31lb. | 4.50 |
$29.40 |
Actual results for April 2017 were as follows:
Production | 29,000 doorknobs |
Direct materials purchased | 12,400 lb. at $11/lb. |
Direct materials used | 8,500 lbs. |
Direct manufacturing labor | 29,200 hours for $671,600 |
Variable manufacturing overhead | $ 65,100 |
Fixed manufacturing overhead | $158,000 |
- A. For the month of April, compute the following variances, indicating whether each is favorable (F) or unfavorable (U):
Required
- a. Direct materials price variance (based on purchases)
- b. Direct materials efficiency variance
- c. Direct manufacturing labor price variance
- d. Direct manufacturing labor efficiency variance
- e. Variable manufacturing overhead spending variance
- f. Variable manufacturing overhead efficiency variance
- g. Production-volume variance
- h. Fixed manufacturing overhead spending variance
- B. Can Williams use any of the variances to help explain any of the other variances? Give examples.
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