The Monroe Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor: Rs. 45.00 Direct materials: 10 lb. at Rs.4.50 per lb. 15.00 Direct manufacturing labor: 0.5 hour at Rs.30 per hour The number of finished units budgeted for January 2020 was 10,000; 9,850 units were actually produced. Actual results in January 2020 were as follows: Direct materials: 98,055 lb. used Direct manufacturing labor: 4,900 hours Rs. 154,350 Assume that there was no beginning inventory of either direct materials or finished units. During the month, materials purchased amounted to 100,000 lb., at a total cost of Rs.465,000. Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage. Required Compute the January 2020 price and eff.ciency variances of direct materials and direct manufacturing labor. Prepare journal entries to record the variances in requirement 1. Comment on the January 2020 price and efficiency variances of Monroe Corporation. Why might Monroe calculate direct materials price variances and direct materials efficiency variances with reference to different points in time? i. ii. ii. iv.

The Monroe Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor: Rs. 45.00 Direct materials: 10 lb. at Rs.4.50 per lb. 15.00 Direct manufacturing labor: 0.5 hour at Rs.30 per hour The number of finished units budgeted for January 2020 was 10,000; 9,850 units were actually produced. Actual results in January 2020 were as follows: Direct materials: 98,055 lb. used Direct manufacturing labor: 4,900 hours Rs. 154,350 Assume that there was no beginning inventory of either direct materials or finished units. During the month, materials purchased amounted to 100,000 lb., at a total cost of Rs.465,000. Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the time of usage. Required Compute the January 2020 price and eff.ciency variances of direct materials and direct manufacturing labor. Prepare journal entries to record the variances in requirement 1. Comment on the January 2020 price and efficiency variances of Monroe Corporation. Why might Monroe calculate direct materials price variances and direct materials efficiency variances with reference to different points in time? i. ii. ii. iv.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

The Monroe Corporation manufactures lamps. It has set up the following standards per
finished unit for direct materials and direct manufacturing labor:
Rs. 45.00
Direct materials: 10 lb. at Rs.4.50 per lb.
15.00
Direct manufacturing labor: 0.5 hour at Rs.30 per hour
The number of finished units budgeted for January 2020 was 10,000; 9,850 units were
actually produced.
Actual results in January 2020 were as follows:
Direct materials: 98,055 lb. used
Direct manufacturing labor: 4,900 hours
Rs. 154,350
Assume that there was no beginning inventory of either direct materials or finished units.
During the month, materials purchased amounted to 100,000 lb., at a total cost of Rs.465,000.
Input price variances are isolated upon purchase. Input-efficiency variances are isolated at the
time of usage.
Required
Compute the January 2020 price and eff.ciency variances of direct materials and
direct manufacturing labor.
Prepare journal entries to record the variances in requirement 1.
Comment on the January 2020 price and efficiency variances of Monroe Corporation.
Why might Monroe calculate direct materials price variances and direct materials
efficiency variances with reference to different points in time?
i.
ii.
ii.
iv.

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