Basic Variance Analysis, Revision of Standards, Journal Entries Petrillo Company produces engine parts for large motors. The company uses a standard cost system for production costing and control. The standard cost sheet for one of its higher volume products (a valve) is as follows: Direct materials (7 lbs. @ $5.40) $37.80 Direct labor (1.75 hrs. @ $18) 31.50 Variable overhead (1.75 hrs. @ $4.00) 7.00 Fixed overhead (1.75 hrs. @ $3.00) 5.25 $81.55 Standard cost per unit During the year, Petrillo had the following activity related to valve production: a. Production of valves totaled 20,600 units. b. A total of 135,400 pounds of direct materials was purchased at $5.36 per pound. c. There were 10,000 pounds of direct materials in beginning inventory (carried at $5.40 per pound). There was no ending inventory. d. The company used 36,500 direct labor hours at a total cost of $656,270. e. Actual fixed overhead totaled $111,000. f. Actual variable overhead totaled $171,000. Petrillo produces all of its valves in a single plant. Normal activity is 20,000 units per year. Standard overhead rates are computed based on normal activity measured in standard direct labor hours. Required: 1. Compute the direct materials price and usage variances. MPV $ MUV 2. Compute the direct labor rate and efficiency variances. Labor Rate Variance Labor Efficiency Variance 3. Compute overhead variances using a two-variance analysis. Budget Variance Volume Variance