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Question 2: Eric Williams is a cost accountant and business analyst for Diamond Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct-cost categories: direct materials and direct manufacturing labor. Williams feels that manufacturing overhead is most closely related to material usage. Therefore, DDC allocates manufacturing overhead to production based upon pounds of materials used. At the beginning of 2017, DDC budgeted annual production of 420,000 doorknobs and adopted the following standards for each doorknob: Input 0.3 Ib. @ $10/lb. 1.2 hours @ $17/hour Cost/Doorknob Direct materials (brass) Direct manufacturing labor Manufacturing overhead: Variable $ 3.00 20.40 $5/b. x 0.3 lb. 1.50 Fixed $15/1b. x 0.3 lb. 4.50 Standard cost per doorknob $29.40 Actual results for April 2017 were as follows: Production 29,000 doorknobs Direct materials purchased Direct materials used 12,400 Ib. at S11/lb. 8,500 lbs. 29,200 hours for $671,600 Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead $ 65,100 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.

Question 2: Eric Williams is a cost accountant and business analyst for Diamond Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct-cost categories: direct materials and direct manufacturing labor. Williams feels that manufacturing overhead is most closely related to material usage. Therefore, DDC allocates manufacturing overhead to production based upon pounds of materials used. At the beginning of 2017, DDC budgeted annual production of 420,000 doorknobs and adopted the following standards for each doorknob: Input 0.3 Ib. @ $10/lb. 1.2 hours @ $17/hour Cost/Doorknob Direct materials (brass) Direct manufacturing labor Manufacturing overhead: Variable $ 3.00 20.40 $5/b. x 0.3 lb. 1.50 Fixed $15/1b. x 0.3 lb. 4.50 Standard cost per doorknob $29.40 Actual results for April 2017 were as follows: Production 29,000 doorknobs Direct materials purchased Direct materials used 12,400 Ib. at S11/lb. 8,500 lbs. 29,200 hours for $671,600 Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead $ 65,100 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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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%V9 l1. UUA o homework- m... -> Actuar direct manutacturing labor cost 12,650 euro Standards Purchase price of direct materials Materials per box 0.03 euro/g 200 g 12 euro/hour Wage rate Boxes per hour 10 Required : Compute the price and efficiency variances of direct materials and direct manufacturing labor. Question 2: Eric Williams is a cost accountant and business analyst for Diamond Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct-cost categories: direct materials and direct manufacturing labor. Williams feels that manufacturing overhead is most closely related to material usage. Therefore, DDC allocates manufacturing overhead to production based upon pounds of materials used. At the beginning of 2017, DDC budgeted annual production of 420,000 doorknobs and adopted the following standards for each doorknob: Input Cost/Doorknob Dircct materials (brass) 0.3 lb. @ $10/lb. $ 3.00 Direct manufacturing labor Manufacturing overhead: 1.2 hours @ $17/hour 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 Direct materials purchased Direct materials used 29,000 doorknobs 12,400 Ib. at $11/lb. 8,500 lbs. Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead 29,200 hours for $671,600 $ 65,100 $158,000 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.
Transcribed Image Text:%V9 l1. UUA o homework- m... -> Actuar direct manutacturing labor cost 12,650 euro Standards Purchase price of direct materials Materials per box 0.03 euro/g 200 g 12 euro/hour Wage rate Boxes per hour 10 Required : Compute the price and efficiency variances of direct materials and direct manufacturing labor. Question 2: Eric Williams is a cost accountant and business analyst for Diamond Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct-cost categories: direct materials and direct manufacturing labor. Williams feels that manufacturing overhead is most closely related to material usage. Therefore, DDC allocates manufacturing overhead to production based upon pounds of materials used. At the beginning of 2017, DDC budgeted annual production of 420,000 doorknobs and adopted the following standards for each doorknob: Input Cost/Doorknob Dircct materials (brass) 0.3 lb. @ $10/lb. $ 3.00 Direct manufacturing labor Manufacturing overhead: 1.2 hours @ $17/hour 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 Direct materials purchased Direct materials used 29,000 doorknobs 12,400 Ib. at $11/lb. 8,500 lbs. Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead 29,200 hours for $671,600 $ 65,100 $158,000 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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