12.29 ** Price and efficiency variances, journal entries Objective 4 Whangaratta Ltd manufactures ceramic 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 34.50 per kg $45.00 Direct manufacturing labour: 0.5 hours at $30 per hour 15.00 The number of finished units budgeted for January was 5000; 4550 units were actually produced. Actual results in January were: Direct materials: 98055 kg used Direct manufacturing labour: 4900 hours $154350 Assume that there was no beginning inventory of either direct materials or finished units. During the month, materials purchases amounted to 100000 kg, at a total cost of $465000. Price variances are isolated upon purchase. Efficiency variances are isolated at the time of usage. Required 1. Calculate the January 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 price and efficiency variances of Whangaratta Ltd. 4. Why might Wangaratta Ltd calculate direct materials price variances and direct materials efficiency variances with reference to different points in time