Expected production (units) 8,000
Standard pounds of DM usage per unit 3.00
Standard DM price per pound $5
Standard DML hours per unit 5.00
Standard DML rate per hour $15.00
Standard VMOH rate $6.00 per DLH
Standard FMOH rate $8.00 per DLH
Actual
Units produced 7,800
Pounds of DM purchased 25,000
Total cost of DM purchased $130,000
Pounds of DM used 23,100
DML hours worked 40,100
Total cost of DML $585,460
VMOH $250,000
FMOH $350,000
a) Calculate the following variances:
Direct materials price variance
Direct materials efficiency variance
Direct manufacturing labor rate variance
Direct manufacturing labor efficiency variance
VMOH spending variance
VMOH efficiency variance
FMOH spending variance
FMOH production-volume variance
b) Explain what each of the calculated variances imply about the firm's operations:
Direct materials price variance
Direct materials efficiency variance
Direct manufacturing labor rate variance
Direct manufacturing labor efficiency variance
VMOH spending variance
VMOH efficiency variance
FMOH spending variance
FMOH production-volume variance
c) Prepare the following journal entries:
Purchase of direct materials
Usage of direct materials
Paying of wages for direct manufacturing labor
Incurrence of VMOH & FMOH
Application of VMOH & FMOH to production
Closing out VMOH and FMOH accounts