Actual Results Purchased 40,800 yards at a total cost of $505,920 Used 37,900 yards in producing 1,700 awnings Actual direct labor cost of $87,912 for a total of 6,660 hours Actual variable MOH $23,976 Actual fixed MOH $37,000 Standard Price and Volume Standards: Direct materials 23.0 yards per awning at $13.00 per yard Direct labor 4.0 hours per awning at $13.00 per hour Variable MOH standard rate $3.00 per direct labor hour Predetermined fixed MOH standard rate $5.00 per direct labor hour Total budgeted fixed MOH cost $32,000 Print Done Peterson Awning manufactures awnings and uses a standard cost system. The Actual cost and operating data from the most recent month are as follows: All manufacturing overhead is allocated on the basis of direct labor hours. Read the requirements company allocates overhead based on the number of direct labor hours. TheE(Click the icon to view the actual results.,) following are the company's cost and standards data EB (Click the icon to view the standards.) Requirement 1. Calculate the standard cost of one awning. Standard cost Direct materials Direct labor Variable MOH Fixed MOH Total standard cost Requirement 2a. Calculate the direct material variances. (Enter the variances as positive numbers. Enter currency amounts to the nearest cent and your answers to Standard cost per unit 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 x ( Peterson Awning manufactures awnings and uses a standard cost system. The Actual cost and operating data from the most recent month are as follows: company allocates overhead based on the number of direct labor hours. The EEClick the icon to view the actual results.) following are the company's cost and standards data: All manufacturing overhead is allocated on the basis of direct labor hours (Click the icon to view the standards.) Read the requirements. Determine the formula for the quantity variance, then compute the quantity variance for direct materials DM quantity variance x ( x ( Requirement 2b. Calculate the direct labor variances. (Enter the variances as positive numbers. Enter currency amounts to the nearest cent and your answers to the nearest whole dollar. Label the variance as favorable (F) or unfavorable (U). Abbreviations used: DL -Direct labor.) First determine the formula for the rate variance, then compute the rate variance for direct labor. x ( x ( -DL rate variance First determine the formula for the efficiency variance, then compute the efficiency variance for direct labor. ) = DL efficiency variance x ( Peterson Awning manufactures awnings and uses a standard cost system. The Actual cost and operating data from the most recent month are as follows: All manufacturing overhead is allocated on the basis of direct labor hours. Read the requirements. company allocates overhead based on the number of direct labor hours. The(Click the icon to view the actual results.) following are the company's cost and standards data: EEB (Click the icon to view the standards.) Requirement 2c. Calculate the variable manufacturing overhead variances. (Enter the variances as positive numbers. Enter currency amounts to the nearest cent and your answers to the nearest whole dollar. Label the variance as favorable (F) or unfavorable (U).) First determine the formula for the rate variance, then compute the rate variance for variable manufacturing overhead. (Round interim calculations to the nearest cent.) Variable overhead )rate variance x ( Now compute the variable manufacturing overhead efficiency variance. First determine the formula for the efficiency variance, then compute the efficiency variance for variable manufacturing overhead. Variable overhead x ( x ( )efficiency variance Requirement 2d. Calculate the fixed manufacturing overhead variances. (Enter the variance as a positive number. Label the variance as favorable (F) or unfavorable Begin by computing the fixed manufacturing overhead budget variance. First determine the formula for the budget variance, then compute the budget variance for fixed manufacturing overhead Fixed MOH = budget variance Now compute the fixed manufacturing overhead volume variance. First determine the formula for the volume variance, then compute the volume variance for fixed manufacturing overhead Fixed MOH = volume variance Requirement 3. Explain what each of the variances you calculated means and give at least one possible explanation for each of those variances. Direct materials: Variance DM price DM quantity Direct Labor: Variance Meaning DL rate DM efficiency Variable manufacturing overhead Variance VOH rate Meaning Possible explanation Possible explanation Meaning Possible explanation Variable manufacturing overhead Variance VOH rate Meaning Possible explanation VOH efficiency Fixed manufacturing overhead Variance Meaning FOH budget Possible explanation FOH volume Are any of the variances likely to be interrelated? The V variance is likely to be related to the variance. It is likely that Peterson Awning VI. This may have resulted in Actual Results Purchased 40,800 yards at a total cost of $505,920 Used 37,900 yards in producing 1,700 awnings Actual direct labor cost of $87,912 for a total of 6,660 hours Actual variable MOH $23,976 Actual fixed MOH $37,000 Standard Price and Volume Standards: Direct materials 23.0 yards per awning at $13.00 per yard Direct labor 4.0 hours per awning at $13.00 per hour Variable MOH standard rate $3.00 per direct labor hour Predetermined fixed MOH standard rate $5.00 per direct labor hour Total budgeted fixed MOH cost $32,000 Print Done Peterson Awning manufactures awnings and uses a standard cost system. The Actual cost and operating data from the most recent month are as follows: All manufacturing overhead is allocated on the basis of direct labor hours. Read the requirements company allocates overhead based on the number of direct labor hours. TheE(Click the icon to view the actual results.,) following are the company's cost and standards data EB (Click the icon to view the standards.) Requirement 1. Calculate the standard cost of one awning. Standard cost Direct materials Direct labor Variable MOH Fixed MOH Total standard cost Requirement 2a. Calculate the direct material variances. (Enter the variances as positive numbers. Enter currency amounts to the nearest cent and your answers to Standard cost per unit 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 x ( Peterson Awning manufactures awnings and uses a standard cost system. The Actual cost and operating data from the most recent month are as follows: company allocates overhead based on the number of direct labor hours. The EEClick the icon to view the actual results.) following are the company's cost and standards data: All manufacturing overhead is allocated on the basis of direct labor hours (Click the icon to view the standards.) Read the requirements. Determine the formula for the quantity variance, then compute the quantity variance for direct materials DM quantity variance x ( x ( Requirement 2b. Calculate the direct labor variances. (Enter the variances as positive numbers. Enter currency amounts to the nearest cent and your answers to the nearest whole dollar. Label the variance as favorable (F) or unfavorable (U). Abbreviations used: DL -Direct labor.) First determine the formula for the rate variance, then compute the rate variance for direct labor. x ( x ( -DL rate variance First determine the formula for the efficiency variance, then compute the efficiency variance for direct labor. ) = DL efficiency variance x ( Peterson Awning manufactures awnings and uses a standard cost system. The Actual cost and operating data from the most recent month are as follows: All manufacturing overhead is allocated on the basis of direct labor hours. Read the requirements. company allocates overhead based on the number of direct labor hours. The(Click the icon to view the actual results.) following are the company's cost and standards data: EEB (Click the icon to view the standards.) Requirement 2c. Calculate the variable manufacturing overhead variances. (Enter the variances as positive numbers. Enter currency amounts to the nearest cent and your answers to the nearest whole dollar. Label the variance as favorable (F) or unfavorable (U).) First determine the formula for the rate variance, then compute the rate variance for variable manufacturing overhead. (Round interim calculations to the nearest cent.) Variable overhead )rate variance x ( Now compute the variable manufacturing overhead efficiency variance. First determine the formula for the efficiency variance, then compute the efficiency variance for variable manufacturing overhead. Variable overhead x ( x ( )efficiency variance Requirement 2d. Calculate the fixed manufacturing overhead variances. (Enter the variance as a positive number. Label the variance as favorable (F) or unfavorable Begin by computing the fixed manufacturing overhead budget variance. First determine the formula for the budget variance, then compute the budget variance for fixed manufacturing overhead Fixed MOH = budget variance Now compute the fixed manufacturing overhead volume variance. First determine the formula for the volume variance, then compute the volume variance for fixed manufacturing overhead Fixed MOH = volume variance Requirement 3. Explain what each of the variances you calculated means and give at least one possible explanation for each of those variances. Direct materials: Variance DM price DM quantity Direct Labor: Variance Meaning DL rate DM efficiency Variable manufacturing overhead Variance VOH rate Meaning Possible explanation Possible explanation Meaning Possible explanation Variable manufacturing overhead Variance VOH rate Meaning Possible explanation VOH efficiency Fixed manufacturing overhead Variance Meaning FOH budget Possible explanation FOH volume Are any of the variances likely to be interrelated? The V variance is likely to be related to the variance. It is likely that Peterson Awning VI. This may have resulted in
