Question

The Seneca 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 $ 5.40 per lb. ......... $ 54.00
Direct manufacturing labor: 0.5 hour at $ 29 per hour ... 14.50
The number of finished units budgeted for January 2013 was 9,760; 9,600 units were actually produced. Actual results in January 2013 were:
Direct materials: 95,500 lbs. used
Direct manufacturing labor: 4,700 hours ....... $ 143,350

Assume that there was no beginning inventory of either direct materials or finished units. During the month, materials purchased amounted to 97,600 lb., at a total cost of $ 536,800. 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 labor.
2. Comment on the January 2013 price and efficiency variances of Seneca Corporation.
3. Why might Seneca calculate direct materials price variances and direct materials efficiency variances with reference to different points in time?



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  • CreatedJanuary 15, 2015
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