At the beginning of

20172017,

DDC budgeted annual production of

430 comma 000430,000

doorknobs and adopted the following standards for each doorknob:

Input

Cost/Doorknob

Direct materials (brass)

0.3 lb. @ $9/lb.

$2.70

Direct manufacturing labor

1.2 hours @ $15/hour

18.00

Manufacturing overhead:

Variable

$6/lb x 0.3 lb.

1.80

Fixed

$14/lb. x 0.3 lb.

4.20

Standard cost per doorknob

Actual results for April

20172017

were as follows:

Production

33,000

doorknobs

Direct materials purchased

12,200

lb. at $12/lb.

Direct materials used

8,000

lbs.

Direct manufacturing labor

29,500

hours for $649,000

Variable manufacturing overhead

$64,900

Fixed manufacturing overhead

$155,000

RossRoss

DouglasDouglas

is a cost accountant and business analyst for

DandyDandy

Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct-cost categories: direct materials and direct manufacturing labor.

DouglasDouglas

feels that manufacturing overhead is most closely related to material usage. Therefore, DDC allocates manufacturing overhead to production based upon pounds of materials used.

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.

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

Before computing the variances complete the tables below. Begin by completing the table for direct materials.

		Actual Input Qty.
		x
	Actual Costs	Budgeted Price		Flexible
	Incurred	Purchases	Usage	Budget
Direct materials

$26.70