Nathan Rogers is a cost accountant and business analyst for Darby Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct-cost categories: direct materials and direct manufacturing labor. Rogers 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 1. 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. Actual Costs Incurred Budgeted Price Purchases Usage Flexible Budget Direct materials a. Direct materials price variance (based on Surchases) is b. The direct materials efficiency variance is Now complete the table for direct labor. Actual Input Qty. Actual Costs Incurred Flexible Budget Budgeted Price Direct Manuf. Labor Choose from any list or enter any number in the input fields and then continue to the next question. Read the requirements. Incurred Budgeted Price Budget Direct Manuf. Labor c. The direct manufacturing labor price variance is d. The direct manufacturing labor efficiency variance is Next, complete the table for variable overhead. (Abbreviation used: Manuf = Manufacturing) Actual Input Qty. Actual Costs Incurred Flexible Budget Allocated Overhead Budgeted Price Variable Manuf. OH e. The variable manufacturing overhead spending variance is U f. The variable manufacturing overhead efficiency variance is L Complete the table for fixed overhead. Same Budgeted Lump Choose from any list or enter any number in the input fields and then continue to the next question. direct-cost categories: direct matonats and direct manucu r e d u Therefore, DOC 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 Actual Costs Sum Regardless of Output Level Flexible Budget Allocated Overhead Incurred Fixed Manuf. OH g. The production-volume variance is h. The fixed manufacturing overhead spending variance is Requirement 2. Can Rogers use any of the variances to help explain any of the other variances? Give examples The direct materials price variance indicates that DDC paid for brass than they had planned. If this is because they purchased a It may explain why they used brass than expected (leading to an) material efficiency variance), quality brass, In tum, since variable manufacturing overhead is assigned based on pounds of materials used, this directly led to the variable overhead efficiency variance. The purchase of this quality of brass may also explain why it took labor time to produce the doorknobs than expected (the direct labor efficiency variance). experienced than expected, which could also be Finally, the related to the direct labor price variance could imply that the workers who were hired were direct material and direct labor efficiency variances. Choose from any list or enter any number in the input fields and then continue to the next question. MacBook Pro i Data Table which manufactures expensive brass doorknobs. DDC us ufacturing overhead is most closely related to material usag Hials used. s for April.) ated At the beginning of 2017, DDC budgeted annual production of 400,000 doorknobs and adopted the following standards for each doorknob: Input Cost/Doorknob Direct materials (brass) 0.3 lb. @ $11/b. $ 3.30 Direct manufacturing labor 1.2 hours @ $15/hour 18.00 Manufacturing overhead: Variable $6/b x 0.3 lb. 1.80 Fixed $14/b. x 0.3 lb. 4.20 27.30 Standard cost per doorknob Print Done * Data Table it may explain why they used brass than expected leading ad In turn, since variable manufacturing overhead is assigned based efficiency variance. The purchase of this quality of brass may also direct labor efficiency variance). be Actual results for April 2017 were as follows: Production 34,000 doorknobs Direct materials purchased 12,600 lb. at $12/1b. Direct materials used 10,100 lbs Direct manufacturing labor 29,100 hours for $640,200 Variable manufacturing overhead $64,400 Fixed manufacturing overhead $152,000 buld Finally, the related to the direct labor price variance could imply direct material and direct labor efficiency Choose from any list or enter any number in the input fields ar Print Done