The Wayne 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 9,790; 9,700 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 97,900 lb., at a total cost of $460,130. Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage. Read the requirements. i Standards X Direct materials: 10 lb. at $4.60 per Ib. $ 46.00 Direct manufacturing labor: 0.5 hour at $29 per hour 14.50 Print Done A Actual Data X Actual results in January 2017 were as follows: Direct materials: 96,000 lb. used Direct manufacturing labor: 4,800 hours $ 146,400 Print Done 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 X = Direct materials (purchases) Direct materials (usage) Direct manufacturing labor II Next determine the formula and calculate the costs for the flexible budget. II Flexible budget cost Direct materials II x Direct manufacturing labor = 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 Credit 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 Wayne Corporation. A key point is that likely to be They are so Fluctuations about standards are bound to occur in a 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 Wayne calculate direct materials price variances and direct materials efficiency variances with reference to different points in time? is found most often. Wayne The purchasing point is where responsibility for is found most often. The production point is where responsibility for Corporation may calculate variances at different points in time to tie in with The Wayne 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 9,790; 9,700 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 97,900 lb., at a total cost of $460,130. Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage. Read the requirements. i Standards X Direct materials: 10 lb. at $4.60 per Ib. $ 46.00 Direct manufacturing labor: 0.5 hour at $29 per hour 14.50 Print Done A Actual Data X Actual results in January 2017 were as follows: Direct materials: 96,000 lb. used Direct manufacturing labor: 4,800 hours $ 146,400 Print Done 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 X = Direct materials (purchases) Direct materials (usage) Direct manufacturing labor II Next determine the formula and calculate the costs for the flexible budget. II Flexible budget cost Direct materials II x Direct manufacturing labor = 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 Credit 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 Wayne Corporation. A key point is that likely to be They are so Fluctuations about standards are bound to occur in a 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 Wayne calculate direct materials price variances and direct materials efficiency variances with reference to different points in time? is found most often. Wayne The purchasing point is where responsibility for is found most often. The production point is where responsibility for Corporation may calculate variances at different points in time to tie in with
