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Ross Harris is a cost accountant and business analyst for Daisy Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct-cost categories: direct materials and direct manufacturing labor. Harris feels that manufacturing overhead is most closely related to material usage. Therefore, DDC allocates manufacturing overhead to production based upon pounds of materials used. E (Click the icon to view the standards.) E (Click the icon to view the actual results for April.) - X Data table Read the requirements Actual results for April 2017 were as follows: Requirement 1. For the month of April, compute the variances, indicating whether each is favorable (F) or unfavorable (U). Production 25,000 doorknobs 12,700 Ib. at $10/b. 7,000 Ibs. Before computing the variances complete the tables below. Begin by completing the table for direct materials. Direct materials purchased Actual Input Qty. x Budgeted Price Direct materials used Actual Costs Flexible Direct manufacturing labor 29,300 hours for $644,600 Incurred Purchases Usage Budget Variable manufacturing overhead $64,600 Direct materials Fixed manufacturing overhead $152,000 - X Data table Requirements Done At the beginning of 2017, DDC budgeted annual production of 410,000 doorknobs and adopted the following standards for each doorknob: 1. For the month of April, compute the following variances, indicating whether each is favorable (F) or unfavorable (U). a. Direct materials price variance (based on purchases) b. Direct materials efficiency variance c. Direct manufacturing labor price variance Input Cost/Doorknob Direct materials (brass) 0.3 lb. @ $9/b. 2.70

Ross Harris is a cost accountant and business analyst for Daisy Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct-cost categories: direct materials and direct manufacturing labor. Harris feels that manufacturing overhead is most closely related to material usage. Therefore, DDC allocates manufacturing overhead to production based upon pounds of materials used. E (Click the icon to view the standards.) E (Click the icon to view the actual results for April.) - X Data table Read the requirements Actual results for April 2017 were as follows: Requirement 1. For the month of April, compute the variances, indicating whether each is favorable (F) or unfavorable (U). Production 25,000 doorknobs 12,700 Ib. at $10/b. 7,000 Ibs. Before computing the variances complete the tables below. Begin by completing the table for direct materials. Direct materials purchased Actual Input Qty. x Budgeted Price Direct materials used Actual Costs Flexible Direct manufacturing labor 29,300 hours for $644,600 Incurred Purchases Usage Budget Variable manufacturing overhead $64,600 Direct materials Fixed manufacturing overhead $152,000 - X Data table Requirements Done At the beginning of 2017, DDC budgeted annual production of 410,000 doorknobs and adopted the following standards for each doorknob: 1. For the month of April, compute the following variances, indicating whether each is favorable (F) or unfavorable (U). a. Direct materials price variance (based on purchases) b. Direct materials efficiency variance c. Direct manufacturing labor price variance Input Cost/Doorknob Direct materials (brass) 0.3 lb. @ $9/b. 2.70

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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Ross Harris is a cost accountant and business analyst for Daisy Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct-cost categories: direct materials and direct manufacturing labor. Harris feels that manufacturing overhead is most closely related to material usage. Therefore, DDC allocates manufacturing overhead to production based upon pounds of materials used. E (Click the icon to view the standards.) E (Click the icon to view the actual results for April.) Data table Read the requirements. Actual results for April 2017 were as follows: Requirement 1. For the month of April, compute the variances, indicating whether each is favorable (F) or unfavorable (U). Production 25,000 doorknobs Before computing the variances complete the tables below. Begin by completing the table for direct materials. Direct materials purchased 12,700 lb. at $10/lb Actual Input Qty. * Budgeted Price Direct materials used 7,000 Ibs. Direct manufacturing labor 29,300 hours for $644,600 Actual Costs Incurred Flexible Budget Purchases Usage Variable manufacturing overhead $64,600 Direct materials Fixed manufacturing overhead $152,000 - X Data table Requirements Done At the beginning of 2017, DDC budgeted annual production of 410,000 doorknobs and adopted the following standards for each doorknob: 1. For the month of April, compute the following variances, indicating whether each is favorable (F) or unfavorable (U). a. Direct materials price variance (based on purchases) b. Direct materials efficiency variance c. Direct manufacturing labor price variance d. Direct manufacturing labor efficiency variance e. Variable manufacturing overhead spending variance f. Variable manufacturing overhead efficiency variance g. Production-volume variance h. Fixed manufacturing overhead spending variance Input Cost/Doorknob Direct materials (brass) 0.3 lb. @ $9/lb. %2$ 2.70 Direct manufacturing labor 1.2 hours @ $18/hour 21.60 Variable manufacturing overhead $6/lb x 0.3 lb. 1.80 4.20 Fixed manufacturing overhead $14/lb. x 0.3 lb. 30.30 2. Can Harris use any of the variances to help explain any of the other variances? Give examples. Standard cost per doorknob
Transcribed Image Text:Ross Harris is a cost accountant and business analyst for Daisy Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct-cost categories: direct materials and direct manufacturing labor. Harris feels that manufacturing overhead is most closely related to material usage. Therefore, DDC allocates manufacturing overhead to production based upon pounds of materials used. E (Click the icon to view the standards.) E (Click the icon to view the actual results for April.) Data table Read the requirements. Actual results for April 2017 were as follows: Requirement 1. For the month of April, compute the variances, indicating whether each is favorable (F) or unfavorable (U). Production 25,000 doorknobs Before computing the variances complete the tables below. Begin by completing the table for direct materials. Direct materials purchased 12,700 lb. at $10/lb Actual Input Qty. * Budgeted Price Direct materials used 7,000 Ibs. Direct manufacturing labor 29,300 hours for $644,600 Actual Costs Incurred Flexible Budget Purchases Usage Variable manufacturing overhead $64,600 Direct materials Fixed manufacturing overhead $152,000 - X Data table Requirements Done At the beginning of 2017, DDC budgeted annual production of 410,000 doorknobs and adopted the following standards for each doorknob: 1. For the month of April, compute the following variances, indicating whether each is favorable (F) or unfavorable (U). a. Direct materials price variance (based on purchases) b. Direct materials efficiency variance c. Direct manufacturing labor price variance d. Direct manufacturing labor efficiency variance e. Variable manufacturing overhead spending variance f. Variable manufacturing overhead efficiency variance g. Production-volume variance h. Fixed manufacturing overhead spending variance Input Cost/Doorknob Direct materials (brass) 0.3 lb. @ $9/lb. %2$ 2.70 Direct manufacturing labor 1.2 hours @ $18/hour 21.60 Variable manufacturing overhead $6/lb x 0.3 lb. 1.80 4.20 Fixed manufacturing overhead $14/lb. x 0.3 lb. 30.30 2. Can Harris use any of the variances to help explain any of the other variances? Give examples. Standard cost per doorknob
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