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Patterson 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: (Click the icon to view the standards.) Actual cost and operating data from the most recent month are as follows: (Click the icon to view the actual results.) All manufacturing overhead is allocated on the basis of direct labor hours. Read the requirements. 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 answers to the nearest whole dollar. Label the variance as favorable (F) or unfavorable (U). Abbreviations used: DM = Direct materials.) First determine the formula for the price variance, then compute the price variance for direct materials. x( 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 positive numbers. Enter currency amounts to the nearest cent and your answers to the nearest whole dollar. Label the variance as favorable (F) or unfavorable (U). Abbreviations used: DL = Direct labor.) 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. x DL efficiency 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: Variance Meaning Possible explanation DM price DM quantity Direct Labor: Direct Labor: Meaning Possible explanation Variance DL rate DM efficiency Requirements ates overhead based on Actual cost and operating data from the most recent month are as follows: (Click the icon to view the actual results.) All manufacturing overhead is allocated on the basis of direct labor hours. Read the requirements. DL rate variance 1. Calculate the standard cost of one awning. 2. Calculate the following variances: a. The direct material variances. b. The direct labor variances. c. The variable manufacturing overhead variances. d. The fixed manufacturing overhead variances. 3. Explain what each of the variances you calculated means and give at least one possible explanation for each of those variances. Are any of the variances likely to be interrelated? direct Standard Price and Volume Standards: e poss D Print Done Direct materials 25.0 yards per awning at $11.00 per yard Direct labor 2.0 hours per awning at $17.00 per hour Variable MOH standard rate $2.00 per direct labor hour Predetermined fixed MOH standard rate $9.00 per direct labor hour Total budgeted fixed MOH cost $30,100 VartaTTC TICOLI Tossible ex DN DN Actual Results Dir Print Done Va Possible e DL Purchased 47,520 yards at a total cost of $489,456 Used 44,200 yards in producing 1,800 awnings Actual direct labor cost of $59,166 for a total of 3,460 hours DN Actual variable MOH $7,266 Actual fixed MOH $33,100 Chd
