Summarizing materials costs, quantity and price variances, and materials variances. The Wellington Company manufactures a chemical product called Kalene, which requires three raw materials. Production is in batches of 1,040 gallons of raw materials that yield only 1,000 gallons of finished product. (Some evaporation of the inert base occurs, but the amount of evaporation varies slightly from batch to batch.) Standard costs are used as a control device. The standard materials costs for each batch of Kalene are as follows:

The output is packaged in 50-gallon drums. During the month of July 19X1, 300 drums of Kalene were produced. There was no beginning or ending work in process inventory. The materials actually used during July were as follows:

Instructions 1. Prepare a summary of materials costs for the month of July (Exhibit 2). Show whether the variances are favorable (F) or unfavorable (U).
2. Compute the quantity and price variances for each of the materials.
3. Prepare a material variances summary for the month (Exhibit 3).
4. Give the general journal entry on July 31, 19X1, to charge the standard materials costs to production and to record the price and quantity variances.

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Standard Cost per Gallon $ 40 Material Quantity Inert base 840 gal Acid 160 gal 1.20 Activator 40 gal 20.50 Total 1,040 gal Standard Cost per Batch $ 336.00 192.00 820.00 $1,348.00