Ceramics Etc. is a manufacturer of large flower pots for urban settings. The company has these standards:

Requirements

1. Compute the variable manufacturing overhead variances. What do each of these variances tell management?

2. Compute the fixed manufacturing overhead variances. What do each of these variances tell management?

i Standard Price and Volume Direct materials (resin) 12 pounds per pot at a cost of $3.00 per pound 2.0 hours at a cost of $15.00 per hour Direct labor Standard variable manufacturing overhead rate $3.00 per direct labor hour Budgeted fixed manufacturing overhead $27,400 $8.00 per direct labor hour (DLH) Standard fixed MOH rate - X Actual Results Ceramics Etc. 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 1,900 flower pots Purchased 23,980 pounds at a cost of Direct materials $3.30 per pound; Used 23,180 pounds to produce 1,900 pots Worked 2.2 hours per flower pot (4,180 Direct labor total DLH) at a cost of $14.00 per hour $3.70 per direct labor hour for total Actual variable manufacturing overhead actual variable manufacturing overhead of $15,466 $27,100 Actual fixed manufacturing overhead Standard fixed manufacturing overhead $30,400 allocated based on actual production X Requirement 1. Compute the variable manufacturing overhead variances. What do each of these variances tell management? (Enter the variances as positive numbers. Enter the currency amounts in the formulas to the nearest cent, then round the final variance amounts favorable (F) or unfavorable (U)) the nearest whole dollar. Label the variance as Begin by computing the variable manufacturing overhead rate variance. First determine the formula for the rate variance, then compute the rate variance for variable manufacturing overhead. Variable overhead rate variance X i 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 = efficiency variance X I What do each of these variances tell management? than expected. The The Vwere variable manufacturing overhead (MOH) rate variance tells managers that than variable MOH efficiency variance tells managers that actual were Requirement 2. Compute the fixed manufacturing overhead variances. What do each of these variances tell management? (Abbreviations used: MOH overhead. Enter the variances as positive numbers. Label the variances as favorable (F) or unfavorable (U).) manufacturing 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 What do each of these variances tell management? fixed overhead budget variance tells managers that fixed The The overhead volume variance tells managers that