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Nathan Harris is a cost accountant and business analyst for Datura Design Company ( DDC ) , which manufactures expensive brass doorknobs. DDC uses two
Nathan Harris is a cost accountant and business analyst for Datura Design Company DDC which manufactures expensive brass doorknobs. DDC uses two directcost categories: direct materials and direct manufacturing labor. Harris 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.
Requirement 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 material
Data table
At the beginning of DDC budgeted annual production of doorknobs and adopted the following standards for each doorknob:
tableInput,CostDoorknobDirect materials brass at $$Direct manufacturing labor, hours at $ hour,,Variable manufacturing overhead,$Fixed manufacturing overhead,$lbStandard cost per doorknob,,$
Requirements
For the month of April, compute the following variances, indicating whether each is favorable 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 Productionvolume variance
h Fixed manufacturing overhead spending variance
Can Harris use any of the variances to help explain any of the other variances? Give examples.
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