Downton Company manufactures two products, Abby and Mansion. The company prepares its master budget on the basis
Question:
Downton Company manufactures two products, Abby and Mansion. The company prepares its master budget on the basis of standard costs. The following data are for January:
Standards | Abby | Mansion |
Direct materials | 3 ounces at $14.50 per ounce | 4 ounces at $17.30 per ounce |
Direct labor | 5 hours at $60.50 per hour | 6 hours at $81.00 per hour |
Variable overhead (per direct labor-hour) | $48.00 | $53.50 |
Fixed overhead (per month) | $368,068 | $399,360 |
Expected activity (direct labor-hours) | 6,680 | 7,800 |
Actual results | ||
Direct material (purchased & used) | 5,200 ounces at $13.50 per ounce | 4,600 ounces at $19.75 per ounce |
Direct labor | 5,110 hours at $64.00 per hour | 7.510 hours at $85.60 per hour |
Variable overhead | $279,550 | $399,510 |
Fixed overhead | $337,950 | $409,500 |
Units produced (actual) | 1,100 units | 1,200 units |
Compute the appropriate variances. Indicate which variances you would investigate and why.
Abby | Mansion | |||
Amount | U/F | Amount | U/F | |
Compute the Direct Materials Variances | ||||
the direct materials price variance | ||||
the direct materials quantity/efficiency variance | ||||
the total variance for direct materials | ||||
Compute the Direct Labor Variances | ||||
the direct labor rate/price variance | ||||
the direct labor efficiency variance | ||||
the total variance for direct labor | ||||
Compute the Variable Manufacturing Overhead Variances | ||||
Price variance | ||||
Efficiency variance | ||||
Compute the fixed manufacturing overhead variances | ||||
Price variance | ||||
Production volume variance | ||||
What I have so far is below, but I'm not sure if I am doing it correctly.
| Abby | Mansion | ||||
| Amount | U/F | Amount | U/F | ||
| Direct Materials Variances | |||||
| Direct materials price variance | $5,200.00 | F | ($11,270.00) | U | |
| Direct materials quantity/efficiency variance | 28,033.33 | U | (33,446.67) | F | |
| Total variance for direct materials | ($22,833.33) | U | $22,176.67 | F | |
| Direct Labor Variances | |||||
| Direct labor rate/price variance | $17,885.00 | U | $34.55 | U | |
| Direct labor efficiency variance | (23,595.00) | F | (582,591.69) | F | |
| Total variance for direct labor | ($5,710.00) | F | ($582,557.14) | F | |
| Variable Manufacturing Overhead Variances | |||||
| Price variance | |||||
| Efficiency variance | |||||
| Fixed Manufacturing Overhead Variances | |||||
| Price variance | |||||
| Production volume variance | |||||
Expert Answer:
Direct Material Price Variance SR AR AQ Abby AQ 5200 ounces SR 1450 AR 1350 1450 1350 5200 5200 F Ma... View the full answer
