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

Answer 1

ADbroer so as per the data and accounting concerts The direct material price variana = (SR-AR) XA Q & Here SR - AR Standard Actual Actual price Price quantity Ag Abby Mansion AO = 4600 AQ = 5200 SR = $ 14.50 AR = $13.50 SR = P17.30 AR = $19.75 as per i =) (14.50-1350) x 5200 as per i = (17.30-19.7) xu6oo = 4270 (0) => 5200 (F) The direct material quantity variance SR standard Poice - CSO-AQ) & SR - () - so-standard quantit AQ.actual aty Abby colouer mansion so e actual output x sa per unit 1100 X 3 = 1200 x y 2 3300 - usoo as per en - As per i (3300-5200) X 10.5 (usoo - uboox 17.3

27550 (0) 3460 (F) NOW Total dired material variana om rate variana + DM quantity variana Abby z - 5200 (F) +22550 (0) 220350 (0) -) Qance Mansion = 1270 (0) + 34 60 (F) = 7810(0) - The direct labour rare variana (SR-AR) × A His Cli = Mansion Abby SR = $60.50 ARZ & 64 og A nis = 5110 hrs BRF $8) ARE $85.60 A host 7510 his so as per coli) So as per in (60.50-6u) x 5110 (81-85.60) x 7510 = 34546(0) 17885 (U) Now the direct labour efficiency variana (s hrs - Ahrs ) x SR (iv)

Abby Mansion e nis & actud! Output x s.br per unit shis a 1100x5 hr 5500 hrs 1200 x 6 = 7200 hrs (ماذا (7200 - 7510) × 81 (5500 - 5110) x 60.50 4 from Livga) L) from inda -) 2540CU) => 23595(F) Total OL varianc: DL rate variana + DL efficiency variance Abby Manson = 17885(0) + 23595(F) =5710(E) Surub(Wt 25110(0) 59656(0) Now variable O/H Price variana => CSR-AR) х A his Mansion Abby se $us SR a $53.50 ARE 279550/5110 AR= 399510/A510 = 5421 53.199 Anase5110 hrs Ahn 7510 hrs - Lug-5471 ) x 5110 = (53.50- 53.197 ) x 7510 - 2295 (F) 2 3 4270 W)

variable & of efficiency variance. (shrs-A hrs) x SR Mansion Abby S has e actual output xs.hr Per unit z 1200 x 627 2006 a 200hrs - 1100 xshy a 5500 his (7 200-7510)x13.50 - 1580-51100x48 = 18720(F) = 16585 (0) fixed O/H volume variana - Budgeted UlH - OCH Absorbed Mansion Abby budgeted oln " hos - 368068 Bubgered 0/4 = 399 360 a hisa 7800 hrs = 6680 his recovery rate, 368068/6680 recovery rate: 399360/ 7800 - 55.1 - 512 std hrs = 5500 std hrs = 7200 = absorbed olH e recovery rate x sid his +55, 1x 5500 = 303050 1.2 x 9 200 = 368640

variana e e budgeted o/H -abrorbed of 368068-303050 - 65018 (0) - 399360-368640 = 30720(0) fixed 0/H Price variana a budgeted olt - actual o/H Mansion abby 399360 +409500 = 368068-337950 = 101uolo). 30118 (F)