Jackson inc manufactures lead crystal glasses jackson incs...

Jackson, Inc., manufactures lead crystal glasses. Jackson, Inc.'s managers recently calculated the following variances after completing production of 7,400 glasses: View the variances. Read the requirements. Requirement 1. For each variance, who in Jackson, Inc.'s organization is most likely responsible? Direct materials cost variance Direct materials efficiency variance Direct labor cost variance Direct labor efficiency variance

Transcript

00:01 So for this question, debbie james is a cost accountant and business analyst for donub design company that manufactures expensive brass donubs.

00:12 Now, ddc uses two direct cost categories, direct material and direct manufacturing labor.

00:20 And james feels that the manufacturing overhead is most closely related to material usage.

00:26 So they allocate manufacturing overhead.

00:30 To production based upon the pounds of material used now at the beginning of 2012 dgc budgeted annual production of 400 donubs and adopted the following standards of donobts so number one it says for the month of april compute the following variance is indicating whether each is favorable or unfavorable so the first is direct materials price variances based on the purchase and might tell whether is favorable or unfavorable direct material price variance based on purchase so this is equal to the statistical price minus the actual rate minus the actual rate multiplied by actual quantity and this is equal to 20 minus 22 from the table multiplied by 50 ,000 and therefore this is equal to 100 ,000 and it is unfavorable because it is minus now the second question is the direct materials efficiency variable for this one this is equal to the standard quantity minus the actual standard quantity minus actual quantity multiplied by standard price and this is equal to 47 ,500 from the question minus 45 ,000 multiply by 20 so the direct material efficiency variance to be equal to 50 ,000 50 ,000 and this is favorable.

03:37 It's in a positive.

03:39 Now the next one is the direct manufacturing label price variance.

03:59 Now the formula for this is the standard rate minus the actual rate multiplied by the actual hours.

04:33 So this is equal to 30 minus 32 .5 multiplied by 20 ,000.

04:48 And this is equals to 50 because of the negative side is 50 ,000 and it's unfavorable.

04:59 Now moving on to the next one, the direct manufacturing label efficiency variance.

05:26 So this is equal to, this is equal to the standard hours minus the actual hours multiplied by standard rates.

05:52 So this is equal to 23 ,0750 minus 20 ,000 multiplied by 30c.

06:03 And direct manufacturing label efficiency variance is equal to 112, 500 and it is favorable...

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