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countant and business analyst for Doorknob Design Company (DDC), which manufactures expensive brass upon 12-29 ** Flexible-budget variances (review of Chapters 11 and 12 David
countant and business analyst for Doorknob Design Company (DDC), which manufactures expensive brass upon 12-29 ** Flexible-budget variances (review of Chapters 11 and 12 David Jam mison feels that manufacturing ison is a cost and busine doorknobs. DDC uses two direct cost categories: direct materials and direct manufacturing labour d to materials usage. Therefore, DDC alocates manufacturing overhead to production based u kilograms of materials used. Required Al the beginning of 2014, DDC budgeted production of 400000 doorknobs and adopted the following siandards for each doorknob: Cost per doorknob Input $3.00 24.00 Direct materials (brass) 0.3 kg @ $10/kg 1.2 hours @ $20/hour Direct manufacturing labour Manufacturing overhead: Variable Fixed 1.80 S6/kg x 0.3 kg 4.50 $33.30 $15/kg x 0.3 kg Standard cost per doorknob Actual results for April 2014 were: Production 35000 doorknobs Direct materials purchased Direct materials used 12000 kg $11/kg 10450 kg 38500 hours for $808 500 $64 150 $152000 Direct manufacturing labour Variable manufacturing overhead Fixed manufacturing overhead. Required for the month of Apri, calculate the following variances, indicating whether each is favourable (F) or unfavourable (U a direct materials price variance (based on purchases) b direct materials efficiency variance c direct manufacturing labour price variance d direct manufacturing labour 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 Jamison use any of the variances to help explain any of the other variances? Give examples
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