Pfeiffer Company Produces a Number of Products,including a Small American

question 39

Essay

Pfeiffer Company produces a number of products,including a small American flag.The firm,which began operations at the beginning of the current year,uses a standard cost system.The standard costs for one American Flag are provided below:
$$\begin{array} { l r } \text { Direct material } ( 0.5 \text { yd @ \$1.00) } & \$ .50 \\\text { Direct labor } ( 1 \mathrm { hr } @ \$ 10.00 ) & 10.00 \\\text { Variable overhed } ( 1 \mathrm { hr } @ \$ 1.00 ) & 1.00 \\\text { Fixed overhead } ( 1 \mathrm { hr } @ \$ 0.50 ) &\underline{ .50} \\&\underline{\$12.00}\end{array}$$ The $0.50 fixed overhead rate is based on total budgeted fixed overhead costs of $17,000.There were no changes in any inventory accounts during the period.The company produced and sold 35,000 units at the following costs:
$$\begin{array} { l r } \text { Direct materials } ( 18,000 \text { yds.) } &\$ 17,280 \\\text { Direct labor } ( 36,000 \text { hrs.) } & 374,400 \\\text { Variable factory overhead } & 34,500 \\\text { Fixed factory overhead } & \underline{15,000}\end{array}$$ Required:
1)Compute and label as Favorable (F)or Unfavorable (U)the following flexible budget variances:
a) Direct materials price variance
b) Direct materials usape variance
c) Direct labor price variance
d) Direct labor usage variance
e) Total variable overhead variance
f) Fixed overhead spending variance
e) Fixed overhead volume variance
2)Comment on the firm's performance.