Elegant Designs is a manufacturer of large flower pots for urban settings. The company has these standards: (Click the icon to view the standards.) Click the icon to view the actual results.) Requirements 1. Compute the direct material price variance and the direct material quantity variance. 2. Who is generally responsible for each variance? 3. Interpret the variances. Direct materials (resin) 10 pounds per pot at a cost of $3.00 per pound 5.0 hours at a cost of $19.00 per hour Requirement 1. Compute the direct material price variance and the direct material quantity variance. (Enter the variances as positive numbers. Enter currency am as favorable (F) or unfavorable (U). Abbreviations used: DM = Direct materials) Direct labor Standard variable manufacturing overhead rate Budgeted fixed manufacturing overhead Standard fixed MOH rate $3.00 per direct labor hour $94,000 $12.00 per direct labor hour (DLH) First determine the formula for the price variance, then compute the price variance for direct materials. Actual quantity purchased x Standard price - Actual price ) = DM price variance Actual Results x Determine the formula for the quantity variance, then compute the quantity variance for direct material. Standard price x Standard quantity allowed Actual quantity used DM quantity variance Elegant Designs allocates fixed manufacturing overhead to production based on standard direct labor hours. Last month, Elegant Designs reported the following actual results for the production of 1,600 flower pots: x Requirement 2. Who is generally responsible for each variance? The department is responsible for the materials price variance. The department is responsible for the materials quantity variance. Requirement 3. Interpret the variances. The materials price variance means that the actual price Elegant Designs personnel paid for resin the standard budgeted price for Direct materials Purchased 17,820 pounds at a cost of $3.50 per pound; used 17,120 pounds to produce 1,600 pots Direct labor. Worked 5.5 hours per unit (8,800 total DLH) at a cost of $18.00 per hour Actual variable manufacturing overhead $3.20 per direct labor hour for total actual variable manufacturing overhead of $28,160 Actual fixed manufacturing overhead $93,500 Standard fixed manufacturing overhead allocated based on actual production ....... $96,000 The materials quantity variance means that Elegant Designs employees used resin than they should have to produce 1,600 pots. Choose from any list or enter any number in the input fields and then continue to the next question. Save for Later
