Question

In: Accounting

IOL Ltd manufactures ceramic lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labour:

 

IOL Ltd manufactures ceramic lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labour:

Direct materials: 10 kg at $4.50 per kg

$45.00

Direct manufacturing labour: 0.5 hours at $30 per hour

15.00

The number of finished units budgeted for January was 5 000; 4 550 units were actually produced.

Actual results in January were:

Direct materials: 45 055 kg used

  

Direct manufacturing labour: 2 250 hours

$70 875

Assume that there was no beginning inventory of either direct materials or finished units. During the month, materials purchases amounted to 50 000 kg, at a total cost of $232 500. Price variances are isolated upon purchase. Efficiency variances are isolated at the time of usage.

 

Required

 

  1. Calculate the January price and efficiency variances of direct materials and direct manufacturing labour.
  2. Prepare journal entries to record the variances in requirement (a) above.
  3. Comment on the January price and efficiency variances of IOL Ltd.
  4. Why might IOL Ltd calculate direct materials price variances and direct materials efficiency variances with reference to different points in time?

Solutions

Expert Solution

ekkarill92 answered 3 years ago
Next > < Previous

Related Solutions

The Schuyler Corporation manufactures lamps. It has set up the following standards per finished unit for...
The Schuyler Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing​ labor: Direct materials: 10 lb. at $4.60 per lb. $46.00 Direct manufacturing labor: 0.5 hour at $30 per hour 15.00 The number of finished units budgeted for January 2017 was 9,650​; 9,600 units were actually produced. Actual results in January 20172017 were as​ follows: Direct materials: 94,500 lb. used Direct manufacturing labor: 4,600 hours $144,900 Assume that there was...
Evergreen, Inc., has the set the following standards for direct materials and direct manufacturing labor for...
Evergreen, Inc., has the set the following standards for direct materials and direct manufacturing labor for each 25-lb. bag of chemical fertilizer it produces: Per Bag                   Direct Materials: 31.25 pounds of XF/2000 @ $0.10          $3.125                   Direct Labor: 0.0625 hours @ $40.00 per hour                         2.500 The company had planned to produce 2,000,000 pounds of the fertilizer during February 2018, but manufactured 25% more fertilizer than planned, using 3,375,000 pounds of XF/2000 and 6,500 direct manufacturing labor hours. The...
Hutto Corp. has set the following standard direct materials and direct labor costs per unit for...
Hutto Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. Direct materials (15 lbs. @ $4 per lb.) $60 Direct labor (4 hrs. @ $14 per hr.) 56 During May the company incurred the following actual costs to produce 8,200 units. Direct materials (125,700 lbs. @ $3.80 per lb.) $ 477,660 Direct labor (36,900 hrs. @ $14.10 per hr.). 520,290 AH = Actual Hours SH = Standard Hours AR =...
Hutto Corp. has set the following standard direct materials and direct labor costs per unit for...
Hutto Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. Direct materials (16 lbs. @ $4 per lb.) $64 Direct labor (3 hrs. @ $15 per hr.) 45 During May the company incurred the following actual costs to produce 8,600 units. Direct materials (139,900 lbs. @ $3.80 per lb.) $ 531,620 Direct labor (29,100 hrs. @ $15.10 per hr.). 439,410 AQ = Actual Quantity SQ = Standard Quantity AP =...
Hutto Corp. has set the following standard direct materials and direct labor costs per unit for...
Hutto Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. Direct materials (15 lbs. @ $4 per lb.) $60 Direct labor (3 hrs. @ $14 per hr.) 42 During May the company incurred the following actual costs to produce 8,400 units. Direct materials (129,900 lbs. @ $3.80 per lb.) $ 493,620 Direct labor (28,300 hrs. @ $14.10 per hr.). 399,030 AQ = Actual Quantity SQ = Standard Quantity AP =...
Hutto Corp. has set the following standard direct materials and direct labor costs per unit for...
Hutto Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. Direct materials (15 lbs. @ $3 per lb.) $45 Direct labor (3 hrs. @ $16 per hr.) 48 During May the company incurred the following actual costs to produce 8,800 units. Direct materials (135,000 lbs. @ $2.80 per lb.) $ 378,000 Direct labor (29,700 hrs. @ $16.10 per hr.). 478,170 AH = Actual Hours SH = Standard Hours AR =...
Hutto Corp. has set the following standard direct materials and direct labor costs per unit for...
Hutto Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. Direct materials (15 lbs. @ $3 per lb.) $45 Direct labor (2 hrs. @ $15 per hr.) 30 During May the company incurred the following actual costs to produce 8,400 units. Direct materials (129,400 lbs. @ $2.80 per lb.) $ 362,320 Direct labor (20,500 hrs. @ $15.10 per hr.). 309,550 AH = Actual Hours SH = Standard Hours AR =...
Reed Corp. has set the following standard direct materials and direct labor costs per unit for...
Reed Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. Direct materials (15 lbs. @ $4 per lb.) $60 Direct labor (3 hrs. @ $15 per hr.) 45 During June the company incurred the following actual costs to produce 8,500 units. Direct materials (130,400 lbs. @ $3.70 per lb.) $ 482,480 Direct labor (29,700 hrs. @ $15.15 per hr.). 449,955 AQ = Actual Quantity SQ = Standard Quantity AP =...
Hutto Corp. has set the following standard direct materials and direct labor costs per unit for...
Hutto Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. Direct materials (14 lbs. @ $4 per lb.) $56 Direct labor (3 hrs. @ $16 per hr.) 48 During May the company incurred the following actual costs to produce 8,100 units. Direct materials (116,300 lbs. @ $3.80 per lb.) $ 441,940 Direct labor (28,900 hrs. @ $16.10 per hr.). 465,290 AQ = Actual Quantity SQ = Standard Quantity AP =...
Upstate Co. manufactures a product that has the following standard costs per unit:      Direct materials:...
Upstate Co. manufactures a product that has the following standard costs per unit:      Direct materials: 40 yards at $2.70 per yard               $108      Direct labor: 7 hours at $18 per hour                          126      Total                                                                             $234 Following information pertains to July:      Direct material purchased: 42,500 yards at $2.78 per yard      Direct material used: 38,000 yards      Direct labor used: 7,500 hours at $18.30 per hour      Budgeted production: 1,200 units      Actual completed production: 1,050 units...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT