Reference no: EM132877571

Question - MATERIALS AND MANUFACTURING LABOR VARIANCES, STANDARD COSTS

Dunn, Inc., is a privately held furniture manufacturer. For August 2018, Dunn had the following standards for one of its products, a wicker chair: Standards per Chair Direct materials 2 square yards of input at $5 per square yard Direct manufacturing labor 0.5 hour of input at $10 per hour

The following data were compiled regarding actual performance: actual output units (chairs) produced, 2,000; square yards of input purchased and used, 3,700; price per square yard, $5.10; direct manufacturing labor costs, $8,820; actual hours of input, 900; labor price per hour, $9.80.

1. Show computations of price and efficiency variances for direct materials and direct manufacturing labor.

2. Suppose 6,000 square yards of materials were purchased (at $5.10 per square yard), even though only 3,700 square yards were used. Suppose further that variances are identified at their most timely control point; accordingly, direct materials price variances are isolated and traced at the time of purchase to the purchasing department rather than to the production department.

3. Journal entries and T-accounts. Prepare journal entries and post them to T-accounts for all transactions.