Adams is a cost accountant and business analyst for DDC, which manufactures expensive brass doorknobs. DDC uses two direct-cost categories: direct materials and direct manufacturing labor. Adams feels that manufacturing overhead is most closely related to material usage. Therefore, DDC allocates manufacturing overhead to production based upon pounds of materials used.

1. For the month of April, compute the following variances, indicating whether each is favorable (F) or unfavorable (U).

Before computing the variances begin by completing the table for direct materials.

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

2. Can Adams use any of the variances to help explain any of the other variances? Give examples.

At the beginning of 2017, DDC budgeted annual production of 400.000 doorknobs and adopted the following standards for each doorknob: Input Cost/Doorknob Direct materials (brass) 0.3 lb. @ $11/lb. $ 3.30 Direct manufacturing labor 1.2 hours @ $15/hour 18.00 Variable manufacturing overhead S7/lb x 0.3 lb. 2.10 4.20 Fixed manufacturing overhead $14/b. x 0.3 lb. $ 27.60 Standard cost per doorknob Actual results for April 2017 were as follows: Production 34,000 doorknobs Direct materials purchased 12,600 lb. at $12/1b. Direct materials used 8,000 lbs. Direct manufacturing labor 29,800 hours for $596,000 Variable manufacturing overhead $64,900 Fixed manufacturing overhead $157,000