Direct Labor and Direct Materials Variances, Journal Entries

Jameson Company produces paper towels. The company has established the following direct materials and direct labor standards for one case of paper towels:

Paper pulp (3 lbs. @ $0.40) $ 1.20 Labor (2 hrs. @ $12) 24.00 Total prime cost $25.20 During the first quarter of the year, Jameson produced 40,000 cases of paper towels. The company purchased and used 120,700 pounds of paper pulp at $0.38 per pound. Actual direct labor used was 81,000 hours at $12.20 per hour.

Required:

Instructions for parts 1 and 2: If a variance is zero, enter "0" and select "Not applicable" from the drop down box.

1. Calculate the direct materials price and usage variances.

Materials Price Variance $ 2. Calculate the direct labor rate and efficiency variances.

Labor Rate Variance