The XYZ Company manufactures its main product using standard costing in a process cost system.

Costs are applied to work-in-process and finished goods inventories based on standard costs. In Department 2, half of the direct materials are added at the beginning of the process and half are added at the end of the process. Standard costs for the work performed in Department 2 are shown below: nu8

Actual costs for May: Direct labor—$11,124.10 for 2,587 direct labor hours Requisitions of direct materials: 16,010 parts Additional Information: Beginning work-in-process inventory is costed by means of fifo. Conversion costs are added evenly throughout the process.
Required:
a Compute the direct materials efficiency variance.
b Compute the direct labor price and the direct labor efficiency variances.
¢ Prepare journal entries for the above assuming the materials inventory is kept at standard costs.

Transcribed Image Text:

Direct materials (6 parts at $.40 a part) Direct labor (1 hour at $4.25) Factory overhead (1 hour at $1.10). Total standard costs added. $2.40 4.25 1.10 $7.75 Department 2 had the following activity during May: Beginning units in process 300 (60% complete) Units transferred in... 2,800 Units transferred out. 2,500 Ending units in process. 600 (20% complete)