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0 Requirements x 1. Compute the direct material price variance and the direct material quantity variance. 2. Who is generally responsible for each variance? 3.
0 Requirements x 1. Compute the direct material price variance and the direct material quantity variance. 2. Who is generally responsible for each variance? 3. Interpret the variances. Elegance is a manufacturer of large flower pots for urban settings. The company has these standards: (Click the icon to view the standards.) (Click the icon to view the actual results.) Read the requirements. Requirement 1. Compute the direct material price variance and the direct material quantity variance. (Enter the variances as positive numbers. Enter currency amounts in the formula to the nearest cent and then round the final variance amount to the nearest whole dollar. Label the variance as favorable (F) or unfavorable (U). Abbreviations used: DM = Direct materials) First determine the formula for the price variance, then compute the price variance for direct materials. DM price variance Determine the formula for the quantity variance, then compute the quantity variance for direct material. x( ) = DM quantity variance x = Requirement 2. Who is generally responsible for each variance? The department is responsible for the materials price variance. The department is responsible for the materials quantity variance. Requirement 3. Interpret the variances. The v materials price variance means that the actual price Ceramics Etc.'s personnel paid for resin V the standard budgeted price for resin. The V materials quantity variance means that Ceramics Etc.'s employees used V resin than they should have to produce 1,700 pots. Standards Direct materials (resin). Direct labor....... 14 pounds per pot at a cost of $6.00 per .. pound .3.0 hours at a cost of $15.00 per hour Standard variable manufacturing overhead rate ..... $2.00 per direct labor hour Budgeted fixed manufacturing overhead $54,100 Standard fixed MOH rate.... $11.00 per direct labor hour (DLH) 1 Actual Results Elegance allocated fixed manufacturing overhead to production based on standard direct labor hours. Last month, the company reported the following actual results for the production of 1,700 flower pots: Purchased 25,350 pounds at a cost of $6.30 per pound; Direct materials.. ..used 24,650 pounds to produce 1,700 pots Worked 3.4 hours per flower pot (5,780 total DLH) at a Direct labor.... ... cost of $14.00 per hour Actual variable manufacturing $2.30 per direct labor hour for total actual variable overhead ... .... manufacturing overhead of $13,294 Actual fixed manufacturing overhead $53,900 Standard fixed manufacturing overhead allocated based on actual production.. $56,100
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