Pfeiffer Company Produces a Number of Products, Including a Small

question 41

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:
The $0.50 fixed overhead rate is based on total budgeted fixed overhead costs of $17,000. There were no changes in any inventory account during the period. The company produced and sold 35,000 units at the following costs:
Required:
1) Compute and label as Favorable (F) or Unfavorable (U) the following flexible budget variances:
2) Comment on the firm's performance. $\begin{array}{|l|r|}\hline \text { Direct material }(0.5 \mathrm{yd} @ \$ 1.00) & \$ 0.50 \\\hline \text { Direct labor }(1 \mathrm{hr} . @ \$ 10.00) & 10.00 \\\hline \text { Variable overhead }(1 \mathrm{hr} . \$ \$ 1.00) & 1.00 \\\hline \text { Fixed overhead }(1 \mathrm{hr} . @ \$ 0.50) & .50 \\\hline&\$12.00\\\hline\end{array}$ $\begin{array}{|l|r|}\hline \text { Direct materials }(18,000 \text { yds. }) & \$ 17,280 \\\hline \text { Direct labor }(36,000 \mathrm{hrs}) & 374,400 \\\hline \text { Variable factory overhead } & 34,500 \\\hline \text { Fixed factory overhead } & 15,000 \\\hline\end{array}$ a) Direct materials price variance
b) Direct materials usage variance
c) Direct labor price variance
d) Direct labor usage variance
e) Total variable overhead variance
f) Fixed overhead spending variance
g) Fixed overhead volume variance

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Definitions:

Retina

The light-sensitive layer of tissue at the back of the inner eye, which converts light images into nerve signals sent to the brain.

Sensory Receptors

Specialized cells or structures in the body that respond to external stimuli, such as light, sound, touch, or chemicals, and send signals to the brain.

Sensation

The method through which our sense organs and nervous system detect and depict energy forms of stimuli from the surroundings.

Perception

The process by which individuals organize and interpret their sensory impressions to give meaning to their environment.