Steven Roberts is a cost accountant and business analyst for Dapper Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct-cost categories: direct materials and direct manufacturing labor. Roberts feels that manufacturing overhead is most closely related to material usage. Therefore, DDC allocates manufacturing overhead to production based upon pounds of materials used. (Click the icon to view the standards.) E (Click the icon to view the actual results for April.) Read the requirements Requirement 1. For the month of April, compute the variances, indicating whether each is favorable (F) or unfavorable (U). Before computing the variances complete the tables below. Begin by completing the table for direct materials. Data Table Actual Input Qty. × Budgeted Price Actual Costs Incurred Flexible Purchases Usage $ 82,500 Budget At the beginning of 2017, DDC budgeted annual production of 450,000 doorknobs and adopted the following standards for each doorknob: - X Data Table Direct materials $ 146,400 $ 134,200 $ 92,400 Input Cost/Doorknob U Direct materials (brass) 0.3 lb. @ $11/b. a. Direct materials price variance (based on purchases) is 12,200 %24 3.30 Actual results for April 2017 were as follows: Direct manufacturing labor 1.2 hours @ $19/hour 22.80 b. The direct materials efficiency variance is 28,000 doorknobs Production Variable manufacturing overhead $6lb x 0.3 lb. 1.80 Direct materials purchased 12,200 lb. at $12/lb. 4.20 Fixed manufacturing overhead $14/lb. x 0.3 lb. Direct materials used 7,500 Ibs. 32.10 Standard cost per doorknob Direct manufacturing labor 29,500 hours for $649,000 Variable manufacturing overhead $64,200 Print Done Fixed manufacturing overhead $161,000 Print Done
Steven Roberts is a cost accountant and business analyst for Dapper Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct-cost categories: direct materials and direct manufacturing labor. Roberts feels that manufacturing overhead is most closely related to material usage. Therefore, DDC allocates manufacturing overhead to production based upon pounds of materials used. (Click the icon to view the standards.) E (Click the icon to view the actual results for April.) Read the requirements Requirement 1. For the month of April, compute the variances, indicating whether each is favorable (F) or unfavorable (U). Before computing the variances complete the tables below. Begin by completing the table for direct materials. Data Table Actual Input Qty. × Budgeted Price Actual Costs Incurred Flexible Purchases Usage $ 82,500 Budget At the beginning of 2017, DDC budgeted annual production of 450,000 doorknobs and adopted the following standards for each doorknob: - X Data Table Direct materials $ 146,400 $ 134,200 $ 92,400 Input Cost/Doorknob U Direct materials (brass) 0.3 lb. @ $11/b. a. Direct materials price variance (based on purchases) is 12,200 %24 3.30 Actual results for April 2017 were as follows: Direct manufacturing labor 1.2 hours @ $19/hour 22.80 b. The direct materials efficiency variance is 28,000 doorknobs Production Variable manufacturing overhead $6lb x 0.3 lb. 1.80 Direct materials purchased 12,200 lb. at $12/lb. 4.20 Fixed manufacturing overhead $14/lb. x 0.3 lb. Direct materials used 7,500 Ibs. 32.10 Standard cost per doorknob Direct manufacturing labor 29,500 hours for $649,000 Variable manufacturing overhead $64,200 Print Done Fixed manufacturing overhead $161,000 Print Done
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Question
Transcribed Image Text:Steven Roberts is a cost accountant and business analyst for Dapper Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct-cost categories: direct materials and direct manufacturing labor. Roberts 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.)
Read the requirements.
Requirement 1. For the month of April, compute the variances, indicating whether each is favorable (F) or unfavorable (U).
Before computing the variances complete the tables below. Begin by completing the table for direct materials.
Data Table
Actual Input Qty. × Budgeted
Price
Actual Costs
Flexible
At the beginning of 2017, DDC budgeted annual production of 450,000 doorknobs
and adopted the following standards for each doorknob:
Incurred
Purchases
Usage
Budget
Data Table
Direct materials
146,400
$ 134,200
$ 82,500
92,400
Input
Cost/Doorknob
a. Direct materials price variance (based on purchases) is
2$
12,200
U
Direct materials (brass)
0.3 lb. @ $11/Ib.
$
3.30
Actual results for April 2017 were as follows:
Direct manufacturing labor
1.2 hours @ $19/hour
22.80
b. The direct materials efficiency variance is
Production
28,000 doorknobs
Variable manufacturing overhead
$6/lb x 0.3 lb.
1.80
Direct materials purchased
12,200 lb. at $12/lb.
4.20
Fixed manufacturing overhead
$14/lb. x 0.3 lb.
Direct materials used
7,500 lbs.
$
32.10
Standard cost per doorknob
Direct manufacturing labor
29,500 hours for $649,000
Variable manufacturing overhead
$64,200
Print
Done
Fixed manufacturing overhead
$161,000
Print
Done
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