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 Standard cost per unit $81.55 During the year, Petrillo had the following activity related to valve production: a. Production of valves totaled 20,600 units. b. A total of 135,500 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 $170,000. 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: 6. Prepare all possible journal entries (assuming a four-variance analysis of overhead variances). For compound entries, if an amount box does not require an entry, leave it blank a. Record materials purchase Materials Direct Materials Price Variance 5,420 Accounts Payable b. Record materials usage Work in Process Direct Materials Usage Variance Materials c. Record direct labor III DL DL DN HII CHI Work in Process Direct Labor Efficiency Variance Direct Labor Rate Variance 730 Wages Payable d. Close materials usage and labor variances to CGS Cost of Goods Sold Direct Labor Rate Variance Direct Materials Usage Variance Direct Labor Efficiency Variance e. Close price variance to CGS Direct Materials Price Variance 281,000 Cost of Goods Sold 281,000 x f. Record actual variable overhead Variable Overhead Control 170,000 Miscellaneous Accounts 170,000 g. Record actual fixed overhead Fixed Overhead Control 111,000 Various Accounts 111,000 h. Apply variable overhead Work in Process 281,000 Variable Overhead Control 281,000 X i. Apply fixed overhead Work in Process 252,350 Fixed Overhead Control 252,350 X