2. The Livingston Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labour: (Click the icon to view the standards.) The number of finished units budgeted for January 2017 was 9,940; 9,800 units were actually produced. 2(Click the icon to view actual data.) Assume that there was no beginning inventory of either direct materials or finished units. During the month, materials purchased amounted to 99,400 kg, at a total cost of $536,760. Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage. Required Requirement 1. Compute the January 2017 price and efficiency variances of direct materials and direct manufacturing labour. Let's begin by calculating the actual input at the budgeted price. (Round your answers to the nearest whole dollar.) Actual input Budgeted price = Cost Direct materials (purchases) Direct materials (usage) Direct manufacturing labour X Next determine the formula and calculate the costs for the flexible budget. (1) (2) = Flexible budget cost Direct materials Direct manufacturing labour Now compute the price and efficiency variances for direct materials and direct manufacturing labour. Label each variance as favourable (F) or unfavourable (U). Price Efficiency variances variances Direct materials (3) (4) Direct manufacturing labour (5) (6) Requirement 2. Prepare journal entries to record the variances in requirement 1. Prepare the journal entry for the direct materials price variance. (Record debits first, then credits. Exclude explanations from any journal entries.) Journal Entry Date Accounts Debit Credit (7) (8) (9) (10) Next prepare the journal entry for direct materials efficiency variance. Journal Entry Print Date Accounts Debit Credit (11) (12) (13) (14) Now prepare the journal entry for direct manufacturing labour price and efficiency variances. Journal Entry Date Accounts Debit Credit |(15) |(16) |(17) (18) Requirement 3. Comment on the January 2017 price and efficiency variances of Livingston Corporation. fashion. Practically, from a control viewpoint, a standard is A key point is that (19) - likely to be (20) They are so (21) Fluctuations about standards are bound to occur in a (22) a band or range of acceptable performance rather than a single-figure measure. Requirement 4. Why might Livingston calculate direct materials price variances and direct materials efficiency variances with reference to different points in time? The purchasing point is where responsibility for (23). is found most often. The production point is where responsibility for (24). is found most often. Livingston Corporation may calculate variances at different points in time to tie in with (25) 1: Standards $ 52.00 Direct materials: 10 kg. at $5.20 per kg. Direct manufacturing labour: 0.5 hour at $32 per hour 16.00 2: Actual Data Actual results in January 2017 were as follows: Direct materials: 97,500 kg. used Direct manufacturing labour: 4,700 hours $ 158,625 Print 3: Required 1. Compute the January 2017 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 2017 price and efficiency variances of Livingston Corporation. 4. Why might Livingston calculate direct materials price variances and direct materials efficiency variances with reference to different points in time? (1) O O Budgeted price O Budgeted price 0000 Actual input Actual price Budgeted input for actual output (2) O O Actual input O Actual price Budgeted input for actual output (3) O OF OU (4) O OF OU (5) O OF OU (6) O OF OU (7) O O Work-in-Process Control O Direct Materials Control Accounts Payable or Cash Control Direct Materials Efficiency Variance Direct Manufacturing Labour Efficiency Variance Direct Materials Price Variance Direct Manufacturing Labour Price Variance Wages Payable Control (8) O O Work-in-Process Control Accounts Payable or Cash Control Direct Manufacturing Labour Efficiency Variance Direct Manufacturing Labour Price Variance Direct Materials Control O Direct Materials Efficiency Variance O Direct Materials Price Variance Wages Payable Control (9) O O Work-in-Process Control Accounts Payable or Cash Control Direct Manufacturing Labour Efficiency Variance Direct Manufacturing Labour Price Variance O Direct Materials Control Direct Materials Efficiency Variance Direct Materials Price Variance O Wages Payable Control (10) O Work-in-Process Control Accounts Payable or Cash Control Direct Manufacturing Labour Efficiency Variance Direct Manufacturing Labour Price Variance O Direct Materials Control Direct Materials Efficiency Variance O Direct Materials Price Variance Wages Payable Control (11) O O Work-in-Process Control Direct Materials Control Accounts Payable or Cash Control Direct Materials Efficiency Variance Direct Manufacturing Labour Efficiency Variance Direct Materials Price Variance Direct Manufacturing Labour Price Variance Wages Payable Control O Work-in-Process Control (12) O O Accounts Payable or Cash Control Direct Manufacturing Labour Efficiency Variance Direct Manufacturing Labour Price Variance O Direct Materials Control Direct Materials Efficiency Variance O Direct Materials Price Variance Wages Payable Control (13) O Work-in-Process Control Accounts Payable or Cash Control Direct Manufacturing Labour Efficiency Variance Direct Manufacturing Labour Price Variance O Direct Materials Control Direct Materials Efficiency Variance O Direct Materials Price Variance Wages Payable Control 0000 0000 (14) O Work-in-Process Control Accounts Payable or Cash Control Direct Manufacturing Labour Efficiency Variance Direct Manufacturing Labour Price Variance Direct Materials Control Direct Materials Efficiency Variance Direct Materials Price Variance Wages Payable Control (15) O O Work-in-Process Control Accounts Payable or Cash Control Direct Manufacturing Labour Efficiency Variance Direct Manufacturing Labour Price Variance O Direct Materials Control Direct Materials Efficiency Variance Direct Materials Price Variance Wages Payable Control (16) O Work-in-Process Control Accounts Payable or Cash Control Direct Manufacturing Labour Efficiency Variance Direct Manufacturing Labour Price Variance O Direct Materials Control Direct Materials Efficiency Variance O Direct Materials Price Variance Wages Payable Control (17) O Work-in-Process Control Accounts Payable or Cash Control Direct Manufacturing Labour Efficiency Variance Direct Manufacturing Labour Price Variance O Direct Materials Control Direct Materials Efficiency Variance Direct Materials Price Variance Wages Payable Control (18) O O Work-in-Process Control (20) O insignificant O significant Accounts Payable or Cash Control Direct Manufacturing Labour Efficiency Variance Direct Manufacturing Labour Price Variance O Direct Materials Control Direct Materials Efficiency Variance Direct Materials Price Variance Wages Payable Control (19) O all of these efficiency variances are O the direct manufacturing labour efficiency variance is O the direct materials efficiency variance is (21) big that they are meaningful O small as to be nearly meaningless (22) O predetermined O random (23) O efficiency variances O price variances (24) O efficiency variances O price variances (25) only the production responsibility area. O only the purchasing responsibility area. the different responsibility areas