Price and efficiency variances, journal entries. (0 minutes)

Drogheda Chemical Ltd has set up the following standards per finished output unit for direct materials and direct manufacturing labour. lop8

REQUIRED 1. Calculate the March 2000 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?

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Direct materials: 10 kg at EUR 3.00 per kg EUR 30.00 Direct manufacturing labour:0.5 hour at EUR 20.00 per hour EUR 10.00 The number of finished output units budgeted for March 2000 was 10,000;9,810 units were actually produced. Actual results in March 2000 were Direct materials: 98,073 kg used Direct manufacturing labour: 4,900 hours EUR 102,900 Assume that there were no opening stocks of either direct materials or finished units. During the month, materials purchases amounted to 100,000 kg, at a total cost of EUR 310,000. Price variances are isolated upon purchase. Efficiency variances are isolated at the time of usage.