Pender Awning manufactures awnings and uses a standard cost system. The company allocates overhead based on the number of direct labor hours. The following are the company's cost and standards data:
Actual cost and operating data from the most recent month are as follows:
All manufacturing overhead is allocated on the basis of direct labor hours.
i Standard Price and Volume Standards: Direct materials 25.0 yards per awning at $15.00 per yard Direct labor 5.0 hours per awning at S13.00 per hour Variable MOH standard rate $8.00 per direct labor hour Predetermined fixed MOH standard rate $6.00 per direct labor hour Total budgeted fixed MOH cost $58,200 . X Actual Results Purchased 52,600 yards at a total cost of $757,440 Used 48,900 yards in producing 2,000 awnings Actual direct labor cost of $130,284 for a total of 9,870 hours Actual variable MOH $82,908 Actual fixed MOH $61,200 Requirement 1. Calculate the standard cost of one awning. Standard cost Standard cost per unit Direct materials Direct labor Variable MOH Fixed MOH Total standard cost Requirement 2a. Calculate the direct material variances. (Enter the variances as positive numbers. Enter currency amounts to the nearest cent and your ans the nearest whole dollar. Label the variance as wers to Direct materials.) favorable (F) or unfavorable (U). Abbreviations used: DM First determine the formula for the price variance, then compute the price variance for direct materials DM price variance ( Determine the formula for the quantity variance, then compute the quantity variance for direct materials. ) = DM quantity variance X ( Requirement 2b. Calculate the direct labor variances. (Enter the variances as the nearest whole dollar. Label the variance as favorable (F) or unfavorable (U). Abbreviations used: DL Direct labor.) positive numbers. Enter currency amounts to the nearest cent and your answers to First determine the formula for the rate variance, then compute the rate variance for direct labor. x( DL rate variance x ( First determine the formula for the efficiency variance, then compute the efficiency variance for direct labor. ( DL efficiency variance ( Requirement 2c. Calculate the variable manufacturing overhead variances. (Enter the variances as and your answers to the nearest whole dollar. Label the variance as favorable (F) or unfavorable (U).) positive numbers. Enter currency amounts to the nearest cent First determine the formula for the rate variance, then compute the rate variance for variable manufacturing overhead. (Round interim calculations to the nearest cent.) Variable overhead ) = ( rate variance ) x ( Now compute the variable manufacturing overhead efficiency variance. First determine the formula for the efficiency variance, then compute the efficiency variance for variable manufacturing overhead. Variable overhead efficiency variance x ( Requirement 2d. Calculate the fixed manufacturing overhead variances. (Enter the variance unfavorable (U).) a positive number. Label the variance as favorable (F) or as Begin by computing the fixed manufacturing overhead budget variance. First determine the formula for the budget variance, then compute the budget variance for fixed manufacturing overhead. Fixed MOH budget variance Now compute the fixed manufacturing overhead volume variance. First determine the formula for the volume variance, then compute the volume variance for fixed manufacturing overhead Fixed MOH volume variance Requirement 3. Explain what each of the variances you calculated means and give at least one possible explanation for each of those variances. Direct materials: Meaning Possible explanation Variance DM price DM quantity Direct Labor Possible explanation Variance Meaning DL rate DM efficiency Variable manufacturing overhead: Possible explanation Variance Meaning VOH rate VOH efficiency Fixed manufacturing overhead: Possible explanation Variance Meaning FOH budget FOH volume Are any of the variances likely to be interrelated? The variance is likely to be related to the variance. It is likely that Pender Awning This may have resulted in
