Reference no: EM132562294

STANDARD COSTING

Whangaratta 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 5000; 4550 units were actually produced.

Actual results in January were:

Direct materials: 98 055 kg used

Direct manufacturing labour: 4900 hours

$154 350

Assume that there was no beginning inventory of either direct materials or finished units.

During the month, materials purchases amounted to 100 000 kg, at a total cost of $465 000. Price variances are isolated upon purchase. Efficiency variances are isolated at the time of usage.

Required

Question 1. Calculate the January price and efficiency variances of direct materials and direct manufacturing labour.

Question 2. Comment on the January price and efficiency variances of Whangaratta Ltd.