Assignment: Chapter 11 Homework 9. CenterWare 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.) Requirements 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 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 XL (2) (3) ) = DM price variance Tx Determine the formula for the quantity variance, then compute the quantity variance for direct material. (5) xD () D (7) ) = DM quantity variance Requirement 2. Who is generally responsible for each variance? - department is The (9) - department is responsible for the materials price variance. The (10) responsible for the materials quantity variance. Requirement 3. Interpret the variances. materials price variance means that the actual price Elegance's personnel paid for resin The (11) - (12) _ the standard budgeted price for resin. resin than they The (13) materials quantity variance means that Elegance's employees used (14) - should have to produce 1,100 pots 1: Standards Direct materials (resin) ....................... 12 pounds per pot at a cost of $4.00 per pound Direct labor. ......... 2.0 hours at a cost of $11.00 per hour Standard variable manufacturing overhead rate $8.00 per direct labor hour Budgeted fixed manufacturing overhead ........ $25,400 Standard fixed MOH rate .......... $12.00 per direct labor hour (DLH) 2: Actual Results CenterWare 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 1,100 flower pots: Direct materials ....... ....... Purchased 14,660 pounds at a cost of $4.30 per pound; used 13,860 pounds to produce 1,100 pots Direct labor. ...... Worked 2.5 hours per flower pot (2,750 total DLH) at a cost of $10.00 per hour Actual variable manufacturing overhead .... $8.40 per direct labor hour for total actual variable manufacturing overhead of S23,100 Actual fixed manufacturing overhead ...... $24,700 Standard fixed manufacturing overhead allocated based on actual production....... $26,400 (1) O Actual hours Actual price Actual quantity purchased Actual quantity used Standard hours allowed Standard price Standard quantity allowed (2) O Actual hours O Actual price Actual quantity purchased Actual quantity used Standard hours allowed O Standard price Standard quantity allowed (4) OF (3) O Actual hours O Actual price Actual quantity purchased O Actual quantity used Standard hours allowed O Standard price Standard quantity allowed (5) O Actual hours O Actual price O Actual quantity purchased O Actual quantity used O Standard hours allowed O Standard price Standard quantity allowed (6) O Actual hours O Actual price O Actual quantity purchased Actual quantity used O Standard hours allowed Standard price Standard quantity allowed (7) O Actual hours Actual price Actual quantity purchased Actual quantity used O Standard hours allowed Standard price Standard quantity allowed (8) O OF OU (9) O marketing O production O purchasing O sales (11) O favorable O unfavorable (12) O O did not exceed exceeded (13) O favorable O unfavorable (14) O less O more (10) O marketing O purchasing O production O sales