summary of Glendale Company's manufacturing variance report for May 2016 follows:

Standard material cost per unit of product is 0.5 pounds at \($8.40\) per pound, and standard direct labor cost is 1.5 hours at \($14.00\) per hour. The total actual materials cost represents 4,900 pounds purchased at \($8.70\) per pound. Total actual labor cost represents 14,200 hours at \($13.60\) per hour. According to standards, variable overhead rate is applied at \($1.70\) per direct labor hour (based on a normal capacity of 15,000 direct labor hours or 10,000 units of product). Assume that all fixed overhead is applied to work in progress inventory.
Required

a. Calculate variances for materials price and efficiency, labor rate and efficiency, and variable overhead spending and efficiency.

b. Prepare general journal entries to record standard costs, actual costs, and related variances for material, labor, and overhead.

c. Prepare journal entries to record the transfer of all completed units to Finished Goods Inventory and the subsequent sale of 8,400 units on account at \($54\) each (assume no beginning finished goods inventory).

d. Prepare a partial income statement (through gross profit on sales) showing gross profit based on standard costs, the incorporation of variances, and gross profit based on actual costs.

Transcribed Image Text:

Direct material Direct labor.. Variable overhead. Fixed overhead.. Total Standard Costs (9,200 units) $ 38,640 Total Actual Costs (9,200 units) $ 42,630 193,120 23,230 Variances $3,990 U 80 F 230 F 193,200 23,460 9,660 $264,960 9,660 $268,640 $3,680 U