1. The Monroe Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor.

Direct Materials : 20 grams at $4.50 per gr. $ 90.00 / lamp

Direct Labor : 1 hour at $25 per hour $ 25.00 / lamp

The number of finished units budgeted for January 2017 was 8,000; 7,850 units were actually produced. Actual results in January 2017 were:

Direct Materials : 152,050 grams used

Direct Labor : 7,900 hours $ 173,800

Assume that there was no beginning inventory of either direct materials or finished units. During the month, materials purchases amounted to 100,000 grams at a total cost of $460,000.

Required:

• Compute the January 2017 price and efficiency variances of direct materials and direct labor and comment on those variances. (20 pts)
• Overhead cost, both variable and fixed, allocated to products using DL hours. The standard rate for Variable OH is $8/DL hour and for fixed OH $25/DL hour. Actual Variable OH is $79,000 and Actual Fixed OH is $204,000. (20 pts)