The Monroe Corporation manufactures lamps. It has set up the following standards per finished unit for direct

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The Monroe Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor:

Direct materials: 10 lb. at $4.50 per lb.                             $45.00
Direct manufacturing labor: 0.5 hour at $30 per hour         15.00

The number of finished units budgeted for January 2012 was 10,000; 9,850 units were actually produced.

Actual results in January 2012 were as follows:

Direct materials: 98,055 lb. used

Direct manufacturing labor: 4,900 hours         $154,350

Assume that there was no beginning inventory of either direct materials or finished units.

During the month, materials purchased amounted to 100,000 lb., at a total cost of $465,000. Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage.

Required
1. Compute the January 2012 price and efficiency variances of direct materials and direct manufacturing labor.
2. Prepare journal entries to record the variances in requirement 1.
3. Comment on the January 2012 price and efficiency variances of Monroe Corporation.
4. Why might Monroe calculate direct materials price variances and direct materials efficiency variances with reference to different points in time?

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Cost Accounting A Managerial Emphasis

ISBN: 978-0132109178

14th Edition

Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav

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