(Click the icon to view the costs and variances under the assumptions "option 2".) Daley, Inc. is a privately held furniture manufacturer. For August 2017, Daley had the following standards for one of its products, a wicker chair: |(Click the icon to view the standards.) (Click the icon to view the costs and variances for actual production "option 15.) Requirement Prepare journal entries and post them to T-accounts for the price and efficiency variances listed under the two options. Summarize how these journal entries differ from normal-costing entries. Option 1. Prepare the journal entry for the direct materials price variance. (Record debits first, then credits. Exclude explanations from any journal entries.) Journal Entry Standard Costs and Usage Date Accounts Debit Credit 1. (a) Standards per chair Direct materials Direct manufacturing labor 2 square yards of input at $5.80 per square yard 0.5 hour of input at $10.80 per hour - Option 1 Option 2 For August 2017, Daley had the following costs and variances for actual production of 2,500 chairs, 4,600 square yards of input purchased and used: The following variances are under the assumption that 7,100 square yards of materials were purchased, even though only 4,600 square yards were used. Suppose further that direct materials price variances are isolated and traced at the time of purchase to the purchasing department rather than to the production department. Option 1: Actual production Actual input X Flexible Option 2: Increase in purchases Actual input Direct materials Actual costs Budgeted price budget costs $ 27,140 $ 26,680 $ 29,000 9,919 9,828 13,500 Direct materials: Direct manufacturing labor Flexible Actual costs Budgeted price budget costs 41,890 $ 41,180 Purchasing $ Price Efficiency Production $ 26,680 $ 29,000 variances variances Price Direct materials $ 460 U 2,320 F Efficiency variance variance Direct manufacturing labor 91 U 3,672 F Direct materials $ 710 U $ 2,320 F (Click the icon to view the costs and variances under the assumptions "option 2".) Daley, Inc. is a privately held furniture manufacturer. For August 2017, Daley had the following standards for one of its products, a wicker chair: |(Click the icon to view the standards.) (Click the icon to view the costs and variances for actual production "option 15.) Requirement Prepare journal entries and post them to T-accounts for the price and efficiency variances listed under the two options. Summarize how these journal entries differ from normal-costing entries. Option 1. Prepare the journal entry for the direct materials price variance. (Record debits first, then credits. Exclude explanations from any journal entries.) Journal Entry Standard Costs and Usage Date Accounts Debit Credit 1. (a) Standards per chair Direct materials Direct manufacturing labor 2 square yards of input at $5.80 per square yard 0.5 hour of input at $10.80 per hour - Option 1 Option 2 For August 2017, Daley had the following costs and variances for actual production of 2,500 chairs, 4,600 square yards of input purchased and used: The following variances are under the assumption that 7,100 square yards of materials were purchased, even though only 4,600 square yards were used. Suppose further that direct materials price variances are isolated and traced at the time of purchase to the purchasing department rather than to the production department. Option 1: Actual production Actual input X Flexible Option 2: Increase in purchases Actual input Direct materials Actual costs Budgeted price budget costs $ 27,140 $ 26,680 $ 29,000 9,919 9,828 13,500 Direct materials: Direct manufacturing labor Flexible Actual costs Budgeted price budget costs 41,890 $ 41,180 Purchasing $ Price Efficiency Production $ 26,680 $ 29,000 variances variances Price Direct materials $ 460 U 2,320 F Efficiency variance variance Direct manufacturing labor 91 U 3,672 F Direct materials $ 710 U $ 2,320 F