Question
Colden Adams is a cost accountant and business analyst for Dallas Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct-cost categories:
Colden Adams is a cost accountant and business analyst for Dallas Design Company (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. (Click the icon to view the standards.) (Click the icon to view the actual results for April.) Read the requirements. Next, complete the table for variable overeau. (Abbreviation used. Manui - Manufacturing) Variable Manuf. OH Actual Costs Incurred Actual Input Qty. x Budgeted Price Flexible Budget e. The variable manufacturing overhead spending variance is f. The variable manufacturing overhead efficiency variance is Complete the table for fixed overhead. Allocated Overhead Actual Costs Incurred Same Budgeted Lump Sum Regardless of Output Level Flexible Budget Allocated Overhead Fixed Manuf. OH g. The production-volume variance is h. The fixed manufacturing overhead spending variance is Requirement 2. Can Adams use any of the variances to help explain any of the other variances? Give examples. The direct materials price variance indicates that DDC paid material efficiency variance). for brass than they had planned. If this is because they purchased a quality brass, it may explain why they used brass than expected (leading to a(n) In turn, since variable manufacturing overhead is assigned based on pounds of materials used, this directly led to the to produce the doorknobs than expected (the direct labor efficiency variance). variable overhead efficiency variance. The purchase of this quality of brass may also explain why it took labor time Finally, the direct labor price variance could imply that the workers who were hired were experienced than expected, which could also be related to the direct material and direct labor efficiency variances.
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