Drogheda Chemical Ltd has set-up the following standards per finished output unit for direct materials and direct manufacturing labour.

Required

1 Calculate the March 2022 price and efficiency variances of direct materials and direct manufacturing labour. Comment on these variances.
2 Prepare journal entries to record the variances in requirement 1.
3 Why might Drogheda Chemical Ltd calculate materials price variances and materials efficiency variances with reference to different points in time?

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Direct materials: 10 kg at 3.00 per kg Direct manufacturing labour: 0.5 hour at 20.00 per hour 30.00 10.00 The number of finished output units budgeted for March 2022 was 10 000; 9810 units were actually produced. Actual results in March 2022 were: Direct materials: 98 073 kg used Direct manufacturing labour: 4900 hours 102 900 Assume that there were no opening stocks of either direct materials or finished units. During the month, materials purchases amounted to 100 000 kg, at a total cost of 310 000. Price variances are isolated upon purchase. Efficiency variances are isolated at the time of usage.