Michael Hopkins is a cost accountant and business analyst for Damask Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct-cost categories: direct materials and direct manufacturing labor. Hopkins feels that manufacturing overhead is most closely related to material usage. Therefore, DDC allocates manufacturing overhead to production based upon pounds of materials used.

At the beginning of 2017, DDC budgeted annual production of 430,000 doorknobs and adopted the following standards for each doorknob:

	Input	Cost/Doorknob
Direct materials (brass)	0.3 lb. @ $10/lb.	$3.00
Direct manufacturing labor	1.2 hours @ $19/hour	22.80
Variable manufacturing overhead	$6/lb x 0.3 lb.	1.80
Fixed manufacturing overhead	$14/lb. x 0.3 lb.	4.20
Standard cost per doorknob		$31.80

Actual results for April 2017 were as follows:

Production	32,000 doorknobs
Direct materials purchased	12,800 lb. at $12/lb.
Direct materials used	7,000 lbs.
Direct manufacturing labor	29,400 hours for $588,000
Variable manufacturing overhead	$64,500
Fixed manufacturing overhead	$160,000

Requirements:

1.

For the month of April, compute the following variances, indicating whether each is favorable (F) or unfavorable (U). a. Direct materials price variance (based on purchases) b. Direct materials efficiency variance c. Direct manufacturing labor price variance d. Direct manufacturing labor 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 Hopkins use any of the variances to help explain any of the other variances? Give examples.

For the month of April, compute the variances, indicating whether each is favorable (F) or unfavorable (U). Before computing the variances complete the tables below. Begin by completing the table for direct materials.

		Actual Input Qty. Budgeted Price
	Actual Costs Incurred	Purchases	Usage	Flexible Budget
Direct materials	?	?	?	?