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Author Question: Mirada Manufacturing produces stained glass lamp shades. The standard cost card for a lamp shade is ... (Read 85 times)

hannahmadyronde

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on: Feb 5, 2023
Mirada Manufacturing produces stained glass lamp shades. The standard cost card for a lamp shade is as follows:

Standard PriceStandard QuantityStandard Cost
Direct materials$4.80/pound1.25 pounds$  6.00
Direct labor$36.00 per DLH0.25 DLH9.00
Variable overhead$12.00 per DLH0.25 DLH3.00
Fixed overhead$18.00 per DLH0.25 DLH   4.50
Total standard cost per shade$22.50

Ron Shop, operations manager, became upset when he reviewed the unfavorable variances for April. He asked Heidi Cotton, controller, for more information. She provided the following overhead budgets, along with the actual results for April.
•The company purchased and used 115,000 pounds of glass during the month.
•Glass purchases during the month were made at $4.35 per pound.
•The direct labor payroll ran $744,150, with an actual hourly rate of $36.30 per direct
labor hour.
•The annual budgets were based on the production of 1,000,000 shades, using 250,000
direct labor hours.
•The company actually produced 82,000 shades during the month.

Variable Overhead Budget
​  Annual Budget  ​  Per Shade  ​  April — Actual  
Indirect material$1,350,000​$1.35​$108,000
Indirect labor900,000​0.90​101,100
Equipment repair600,000​0.60​49,200
Equipment power   150,000​0.15​   36,900
Total$3,000,000​$3.00​$295,200


Fixed Overhead Budget
​​Annual BudgetApril — Actual
Supervisory salaries$  780,000​$   66,000
Insurance and property tax1,290,000​108,000
Depreciation1,800,000​191,700
Utilities   630,000​   64,800
Total$4,500,000​$430,500

Required:

a.Calculate the direct materials price and quantity variances for April.
b.Calculate the direct labor rate and efficiency variances for April.
c.Calculate the variable overhead spending and efficiency variances for April.
d.Calculate the fixed overhead spending variance for April.
e.Provide an explanation for each variance you calculated.
f.Which of these variances should Ron be held responsible for? Why?
Managerial Accounting ¦ Davis ¦ 4th Edition
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Marked as best answer by hannahmadyronde on Feb 5, 2023

senorfranco

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Reply #1 on: Feb 5, 2023
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hannahmadyronde

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Reply 2 on: Feb 5, 2023
Great answer, keep it coming :)

Animal_Goddess

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Reply 3 on: Yesterday
Wow, this really help

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