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

Question:

Drogheda Chemical Ltd has set up the following standards per finished output unit for direct materials and direct manufacturing labour.
Direct materials: 10 kg at €3.00 per kg..............................€30.00
Direct manufacturing labour: 0.5 hour at €20.00 per hour........€10.00
The number of finished output units budgeted for March 2015 was 10 000; 9810 units were actually produced.
Actual results in March 2015 were:
Direct materials: 98 073 kg used
Direct manufacturing labour: 4900 hours....................€102 900
Assume that there were no opening 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.
Required
1. Calculate the March 2015 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?
Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...