(Direct material and labor variances) Steve Spurrier Cottonworks produces 100 percent cotton T-shirts. For each T-shirt, standard direct material and la¬ bor costs follow:

Actual March production and costs for the company to produce 5,000 T-shirts are:

a. Compute the direct material and direct labor variances.

b. How might the sales and production managers explain the direct mater¬ ial variances?

c. How might the production and personnel managers explain the direct labor variances?

d. Record the year-end adjusting entry to close the material and labor vari¬ ances.LO.1

Transcribed Image Text:

Direct material Direct labor 2.0 yards $3.00 0.7 hour $2.50