The Chemung Corporation manufactures lamps. It has set up the following standard
ID: 2577379 • Letter: T
Question
The Chemung Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor:
Direct Materials: 10lb. at $5.40 per lb----$54.00
Direct manufactoring labor: 0.5 hour at $30 per hour ----15.00
The number of finished units budgeted for January 2014 was 9,860; 9,750 units were actually produced.
Actual results in Janurary 2014 were as follows:
Direct materials: 96,500lb used
Direct manufactoring labor: 4800 hours---$151,200
Assume that there was no beginning inventory of either direct materials or finished units. During the month, materials purchases amounted to 98,600 lb., at a total cost of $542,300. Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage.
U materials purchases amounted to 98,600 lb., at a toa ss. Input-efficiency variances are isolated at the time of usage. Read the requirements the January 2014 price and efficiency variances of direct materials and direct manufacturing labor Requirement 1. Compute Lets begin by calulating the actual input at the budgeted price.(Round your answers to the nearest whole dollar.) Actual input xBudgeted price Cost Direct materials (purchases) Direct materials (usage) Direct manufacturing labor Next determine the formula and calculate the costs for the fexible budget Flexible budget cost Direct materials Direct manufacturing labor e Now compute the price and efficiency variances for direct materials and direct manufacturing labor. Label each variance as favorable (F) or unfavorable (U) Choose from any list or enter any number in the input fields and then continue to the next question. Ao MacBook AirExplanation / Answer
ACTUAL INPUT AT BUDGETED PRICE A B C=A*B Actual input Budgeted Cost Price Direct material (purchase) 98600 $5.40 $532,440 Direct material(usage) 96500 $5.40 $521,100 Direct manufacturing labor 4800 $30 $144,000 COST FOR THE FLIXIBLE BUDGET A B=A*9750 Standard cost Standard cost per unit for 9750units Direct Material $54.00 $526,500 Direct manufacturing labor $15 $146,250 Price & Efficiency Variances Price Variance=Actual Quantity*(Budgeted price-Actual price) Efficiency Variance=Budgeted Price*(Budgeted quantity-Actual quantity) Input price variance are isolated upon purchase Efficiency variance at the time of usage Hence, for price variance, purchase quantity needs to be used For efficiency variance usage quantity needs to be used Material price variance -9860 Unfavourable (Purchase quantity*(Budgeted price -Actual price)= (532440-542300) Material efficiency variance 5400 Favourable (Budgeted price*Budgeted quantity)-(Budgeted price*acutual quantity)= (526500-521100) Labor Price variance -7200 Unfavourable) (Actual quantity*Budgeted price-Actual quantity*Actual price)= (144000-151200) Labor efficiency variance 2250 Favourable (Budgeted price* budgeted quantity-Budgeted price*Actual quantity)= (146250-(30*4800)) Price variance Efficiency variance Direct material 9860 Unfavourable 5400 Favourable Direct manufacturing labor 7200 Unfavourable 2250 Favourable Journal Entry Account title & explanation Debit Credit Inventory $532,440 Direct Material price variance $9,860 Accounts payable $542,300 (To record Purchase on account) Work in process $526,500 Material efficiency variance $5,400 Inventory $521,100 (to record usage of direct material) MANUFACTURING DIRECT LABOUR JOURNAL ENTRY Work in process $146,250 Direct labor price variance $7,200 Direct labor efficiency variance $2,250 Direct labor wages payable (to record usage of direct labor) $151,200