1. Compute the price and efficiency variances of direct materials and direct manufacturing labor.
1. Compute the price and efficiency variances of direct materials and direct manufacturing labor.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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![Input
0.3 lb. @ $10/lb.
1.2 hours @$17/hour
Cost/Doorknob
$ 3.00
Direct matorials (brass)
Direct manufacturing labor
Manufacturing overhead:
20.40
Variable
$5/lb. x 0.3 lb.
1.50
Fixed
$15/lb. x 0.3 lb.
4.50
Standard cost per doorknob
$29.40
Actual results for April 2017 were as follows:
Production
29,000 doorknobs
12,400 lb. at $11/lb.
8,500 lbs.
29,200 hours for $671,600
$ 65,100
Direct materials purchased
Direct materials used
Direct manufacturing labor
Variable manufacturing overhead
Fixed manufacturing overhead
S158,000
Required :
1. Compute the price and efficiency variances of direct materials and direct manufacturing labor.
2. Compute the spending and efficiency variances of variable overhead and spending and volume of
fixed overhead.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc9b9ba70-7180-47ee-b708-ec778a5a8937%2F5c41d6a2-c05d-49d8-8323-16272afed371%2F6kiby33_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Input
0.3 lb. @ $10/lb.
1.2 hours @$17/hour
Cost/Doorknob
$ 3.00
Direct matorials (brass)
Direct manufacturing labor
Manufacturing overhead:
20.40
Variable
$5/lb. x 0.3 lb.
1.50
Fixed
$15/lb. x 0.3 lb.
4.50
Standard cost per doorknob
$29.40
Actual results for April 2017 were as follows:
Production
29,000 doorknobs
12,400 lb. at $11/lb.
8,500 lbs.
29,200 hours for $671,600
$ 65,100
Direct materials purchased
Direct materials used
Direct manufacturing labor
Variable manufacturing overhead
Fixed manufacturing overhead
S158,000
Required :
1. Compute the price and efficiency variances of direct materials and direct manufacturing labor.
2. Compute the spending and efficiency variances of variable overhead and spending and volume of
fixed overhead.
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