The Wayne Corporation manufactures lamps.

It has set up the following standards per finished unit for direct materials and direct manufacturing labor:

Direct materials: 10 lbs. at $4.90 per lb.	$49.00
Direct manufacturing labor: 0.5 hour at $32 per hour	16.00

The number of finished units budgeted for January 2012 was 9,710; 9,700

Actual results in January 2012 were:

Direct materials: 95,000 lbs. used
Direct manufacturing labor: 4,600 hours	$155,250

Assume that there was no beginning inventory of either direct materials or finished units. During the month, materials purchases amounted to 97,100

lbs., at a total cost of $490,355. Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage.

Requirements

1.	Compute the January 2012 price and efficiency variances of direct materials and direct manufacturing labor.
2.	Prepare journal entries to record the variances in requirement 1.

Requirement 1. Compute the January 2012 price and efficiency variances of direct materials and 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. Explanations are not required.)

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