Data: 04/1320 2. The Yates Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor: (Click the icon to view the standards) The number of finished units budgeted for January 2017 was 9,690, 9,650 units were actually produced (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 96,900 lb., at a total cost of $528,105. Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage. Read the requirements Requirement 1. Compute the January 2017 price and efficiency variances of direct materials and direct manufacturing labor. Let's begin by calculating the actual input at the budgeted price. (Round your answers to the nearest whole dollar. Actual input x Budgeted price = Cost Direct materials (purchases) Direct materials (usage) Direct manufacturing labor = Next determine the formula and calculate the costs for the flexible budget. (2) = Flexible budget Direct materials Direct manufacturing labor Now compute the price and efficiency variances for direct materials and direct manufacturing labor. Label each variano favorable (F) or unfavorable (U). Price Efficiency variances variances Direct materials Direct manufacturing labor (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 explanation any journal entries.) Journal Entry Date Accounts Debit Credit (7) (9) (10) Next prepare the journal entry for direct materials efficiency variance. Journal Entry Accounts Debit Credit (13) |(14) Now prepare the journal entry for direct manufacturing labor price and efficiency variances Journal Entry Date Accounts Debit (15) Credit (16) (18) Requirement 3. Comment on the January 2017 price and efficiency variances of Yates Corporation A key point is that (19) likely to be (20) They are so (21) Fluctuations about standards are bound to occur in a (22) fashion. Practically, from a control viewpoint, a standard is a band or range of acceptable performance rather than a single-figure measure Requirement 4. Why might Yates 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 Yates Corporation may calculate variances at different points in time 10 tie in with (25) 1: Standards Direct materials: 10 lb. at $5.30 per lb. Direct manufacturing labor: 0.5 hour at $30 per hour $ 53.00 15.00 2: Actual Data Actual results in January 2017 were as follows: Direct materials: 95,000 lb. used Direct manufacturing labor. 4,700 hours $ 146,875 3: Requirements 1. Compute the January 2017 price and efficiency variances of direct materials and direct manufacturing labor 2. Prepare journal entries to record the variances in requirement 1. 3. Comment on the January 2017 price and efficiency variances of Yates Corporation 4. Why might Yates calculate direct materials price variances and direct materials efficiency variances with reference to different points in time
