The following data were drawn from the records of Fanning Corporation. Planned volume for year (static budget) Standard direct materials cost per unit Standard direct labor cost per unit Total expected fixed overhead costs Actual volume for the year (flexible budget) Actual direct materials cost per unit Actual direct labor cost per unit Total actual fixed overhead costs 4,100 units 3.50 pounds @ $ 1.20 per pound 3.60 hours @ $4.20 per hour $ 22,550 4,200units 3.20 pounds @ $1.70 per pound 4.00 hours @ $3.60 per hour $ 18,650 Required a. Prepare a materials variance information table showing the standard price, the actual price, the standard quantity, and the actual quantity. b. Calculate the materials price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U). c. Prepare a labor variance information table showing the standard price, the actual price, the standard hours, and the actual hours. d. Calculate the labor price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U). e. Calculate the predetermined overhead rate, assuming that Fanning uses the number of units as the allocation base. f. Calculate the fixed cost spending variance. Indicate whether the variance is favorable (F) or unfavorable (U). g. Calculate the fixed cost volume variance. Indicate whether the variance is favorable (F) or unfavorable (U).
The following data were drawn from the records of Fanning Corporation. Planned volume for year (static budget) Standard direct materials cost per unit Standard direct labor cost per unit Total expected fixed overhead costs Actual volume for the year (flexible budget) Actual direct materials cost per unit Actual direct labor cost per unit Total actual fixed overhead costs 4,100 units 3.50 pounds @ $ 1.20 per pound 3.60 hours @ $4.20 per hour $ 22,550 4,200units 3.20 pounds @ $1.70 per pound 4.00 hours @ $3.60 per hour $ 18,650 Required a. Prepare a materials variance information table showing the standard price, the actual price, the standard quantity, and the actual quantity. b. Calculate the materials price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U). c. Prepare a labor variance information table showing the standard price, the actual price, the standard hours, and the actual hours. d. Calculate the labor price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U). e. Calculate the predetermined overhead rate, assuming that Fanning uses the number of units as the allocation base. f. Calculate the fixed cost spending variance. Indicate whether the variance is favorable (F) or unfavorable (U). g. Calculate the fixed cost volume variance. Indicate whether the variance is favorable (F) or unfavorable (U).
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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Transcribed Image Text:The following data were drawn from the records of Fanning Corporation.
Planned volume for year (static budget)
Standard direct materials cost per unit
Standard direct labor cost per unit
Total expected fixed overhead costs.
Actual volume for the year (flexible budget)
Actual direct materials cost per unit
Actual direct labor cost per unit
Total actual fixed overhead costs
Required
a. Prepare a materials variance information table showing the standard price, the actual price, the standard quantity, and the actual
quantity.
b. Calculate the materials price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U).
c. Prepare a labor variance information table showing the standard price, the actual price, the standard hours, and the actual hours.
d. Calculate the labor price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U).
e. Calculate the predetermined overhead rate, assuming that Fanning uses the number of units as the allocation base.
Req A
f. Calculate the fixed cost spending variance. Indicate whether the variance is favorable (F) or unfavorable (U).
g. Calculate the fixed cost volume variance. Indicate whether the variance is favorable (F) or unfavorable (U).
Complete this question by entering your answers in the tabs below.
Req B
Standard price
Actual price
Req C
4,100 units
pounds @ $ 1.20 per
pound
3.50
3.60 hours @ $4.20 per hour
$ 22,550
4,200 units
3.20 pounds @ $1.70 per pound
4.00 hours @ $3.60 per hour
Req D
Standard quantity for flexible budget
Actual quantity used
$ 18,650
Materials Variance Information Table
Prepare a materials variance information table showing the standard price, the actual price, the standard quantity, and the
actual quantity.
Note: Enter "Standard price" and "Actual price" to 2 decimal places.
< Req A
Req E to G
per pound
per pound
pounds
pounds
Req B >
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