Question

The Monroe Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labour:
Direct materials: 10 kg at $4.50 per kg ..........$45.00
Direct manufacturing labour: 0.5 hour at $30 per hour .... 15.00
The number of finished units budgeted for January 2013 was 10,000; 9,850 units were actually produced.
Actual results in January 2013 were:
Direct materials: 98,055 kg used
Direct manufacturing labour: 4,900 hours .... $154,350
Assume that there was no beginning inventory of either direct materials or finished units. During the month, materials purchases amounted to 100,000 kg, 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 2013 price and efficiency variances of direct materials and direct manufacturing labour.
2. Prepare journal entries to record the variances in requirement 1.
3. Comment on the January 2013 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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  • CreatedJuly 31, 2015
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