alph Company produces engine parts forlarge motors. The firm uses a standard cost system for production costing andcontrol. The standard cost sheet for one ofits higher volume products (a valve) is as follows Directmaterials (6 1bs.@S5.4) Direct labor (1.5 hrs. @$18) Variable overhead (1.5 hrs. $4) Fixedoverhead (1.5 hrs. @S3) $32.4 $27 $6 $4.5 $69.9 Standard unit cost Ralph computes its overheadrates using normal activity which is 20,000 units peryear. The actual operating data for the year are as follows a. Production of valves totaled 20,600 units. b. A total of 135,400 pounds of direct materials was purchased at $725,744 C. Direct materials used: 130,000pounds d. The company used 30,500 directlabor hours at a total cost of $579,500 e. Actual fixed overhead totaled$110,000 f. Actual variable overhead totaled $168,000 [Hint: AQ in MPV is units purchased; AQ in MUV is units used] Required (1) Determine the directmaterials price variance and the direct materials usage variance (2) Determine the direct labor rate variance and the direct labor efficiency variance (3) Determine the four overhead variances (4) Prepare journal entry to record materials acquisition (5) Prepare journal entry to record materials requisition (6) Prepare journal entry to record the use oflabor (7) Preparejournal entry to record applied overhead (8) Preparejournal entry to record overhead variances (9) Prepare the necessary closing entries Answers (1) MPV-(-$0.04) x 135,400-($5.416) F; MUV-6.400 x $5.40-$34,560 U (2) LRV = $30,500 U; LEV = ($7,200) F (2) VOH spending variance- $46,000 U; VOH efficiency variance-($1,600) F FOH spending variance- $20,000 U; FOH volume variance ($2,700) F