The Chemung Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor: E (Click the icon to view the standards.) The number of finished units budgeted for January 2017 was 9,810; 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 98,100 lb., at a total cost of $519,930. Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage. Read the requirements. i X Standards X Actual Data Direct materials: 10 lb. at $5.20 per lb. Actual results in January 2017 were as follows: $ 52.00 Direct manufacturing labor: 0.5 hour at $31 per hour 15.50 Direct materials: 96,000 lb. used Direct manufacturing labor: 4,800 hours $ 157,200 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 Budgeted price = Cost 98100 5.20 510120 Direct materials (purchases) Direct materials (usage) Direct manufacturing labor 96000 5.2 499200 4800 31 = 148800 Next determine the formula and calculate the costs for the flexible budget. Budgeted input for actual output X Budgeted price Flexible budget cost Direct materials 5.2 Direct manufacturing labor 31 Now compute the price and efficiency variances for direct materials and direct manufacturing labor. Label each variance as favorable (F) or unfavorable (U). Now compute the price and efficiency variances for direct materials and direct manufacturing labor. Label each variance as favorable (F) or unfavorable (U). Price Efficiency variances variances Direct materials Direct manufacturing labor 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 Credi Next prepare the journal entry for direct materials efficiency variance. Journal Entry Date Accounts Debit Credit Now prepare the journal entry for direct manufacturing labor price and efficiency variances. Journal Entry Date Accounts Debit Credit Requirement 3. Comment on the January 2017 price and efficiency variances of Chemung Corporation. A key point is that likely to be They are so Fluctuations about standards fashion. Practically, from a control viewpoint, a standard is a band or range of acceptable performance rather than a single-figure measure. are bound to occur in a Requirement 4. Why might Chemung calculate direct materials price variances and direct materials efficiency variances with reference to different points in time? is found most often. The purchasing point is where responsibility for is found most often. The production point is where responsibility for Chemung Corporation may calculate variances at different points in time to tie in with Choose from any list or enter any number in the input fields and then continue to the next question. ? Save for Later Screenshot
