Question
Downton Company manufactures two products, Abby and Mansion. The company prepares its master budget on the basis of standard costs. The following data are for
Downton Company manufactures two products, Abby and Mansion. The company prepares its master budget on the basis of standard costs. The following data are for January:
Standards | Abby | Mansion |
Direct materials | 3 ounces at $14.50 per ounce | 4 ounces at $17.30 per ounce |
Direct labor | 5 hours at $60.50 per hour | 6 hours at $81.00 per hour |
Variable overhead (per direct labor-hour) | $48.00 | $53.50 |
Fixed overhead (per month) | $368,068 | $399,360 |
Expected activity (direct labor-hours) | 6,680 | 7,800 |
Actual results | ||
Direct material (purchased & used) | 5,200 ounces at $13.50 per ounce | 4,600 ounces at $19.75 per ounce |
Direct labor | 5,110 hours at $64.00 per hour | 7.510 hours at $85.60 per hour |
Variable overhead | $279,550 | $399,510 |
Fixed overhead | $337,950 | $409,500 |
Units produced (actual) | 1,100 units | 1,200 units |
Compute the appropriate variances. Indicate which variances you would investigate and why.
Abby | Mansion | |||
Amount | U/F | Amount | U/F | |
Compute the Direct Materials Variances | ||||
the direct materials price variance | ||||
the direct materials quantity/efficiency variance | ||||
the total variance for direct materials | ||||
Compute the Direct Labor Variances | ||||
the direct labor rate/price variance | ||||
the direct labor efficiency variance | ||||
the total variance for direct labor | ||||
Compute the Variable Manufacturing Overhead Variances | ||||
Price variance | ||||
Efficiency variance | ||||
Compute the fixed manufacturing overhead variances | ||||
Price variance | ||||
Production volume variance | ||||
What I have so far is below, but I'm not sure if I am doing it correctly.
| Abby | Mansion | ||||
| Amount | U/F | Amount | U/F | ||
| Direct Materials Variances | |||||
| Direct materials price variance | $5,200.00 | F | ($11,270.00) | U | |
| Direct materials quantity/efficiency variance | 28,033.33 | U | (33,446.67) | F | |
| Total variance for direct materials | ($22,833.33) | U | $22,176.67 | F | |
| Direct Labor Variances | |||||
| Direct labor rate/price variance | $17,885.00 | U | $34.55 | U | |
| Direct labor efficiency variance | (23,595.00) | F | (582,591.69) | F | |
| Total variance for direct labor | ($5,710.00) | F | ($582,557.14) | F | |
| Variable Manufacturing Overhead Variances | |||||
| Price variance | |||||
| Efficiency variance | |||||
| Fixed Manufacturing Overhead Variances | |||||
| Price variance | |||||
| Production volume variance | |||||
Step by Step Solution
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Direct Material Price Variance SR AR AQ Abby AQ 5200 ounces SR 1450 AR 1350 1450 1350 5200 5200 F Ma...
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Managerial Accounting
Authors: Ronald W Hilton
7th Edition
0073022853, 978-0073022857
