Direct Labor and Direct Materials Variances, Journal Entries

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

Paper pulp $(4$ lbs$.$ @ $$0\mathrm{.}30)$ $ $1\mathrm{.}20$

Labor $(1\mathrm{.}8$ hrs$.$ @ $$18)32\mathrm{.}40$

Total prime cost $$33\mathrm{.}60$

During the first quarter of the year, Samson produced $40,000$ cases of paper towels. The company purchased and used $160,700$ pounds of paper pulp at $$0\mathrm{.}28$ per pound. Actual direct labor used was $73,000$ hours at $$18\mathrm{.}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.

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$1.$ Calculate the direct materials price and usage variances.

Materials Price Variance $fill in the blank a$0$a$903$f$5$b$04$f$07$a$\_1$

Favorable

Materials Usage Variance $fill in the blank a$0$a$903$f$5$b$04$f$07$a$\_3$

Unfavorable

$2.$ Calculate the direct labor rate and efficiency variances.

Labor Rate Variance $fill in the blank a$0$a$903$f$5$b$04$f$07$a$\_5$

$-$

Unfavorable

Labor Efficiency Variance $fill in the blank a$0$a$903$f$5$b$04$f$07$a$\_7$

Unfavorable

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$3.$ Prepare the journal entries for $(1)$ the direct materials price variance, $(2)$ the direct materials usage variance, and $(3)$ the direct labor variances. If an amount box does not require an entry, leave it blank.

$1.$

Materials

Direct Materials Price Variance

Accounts Payable

$2.$

Work in Process

$48,000$

Direct Materials Usage Variance

Incorrect

Materials

$3.$

Work in Process

$1,296,000$

Direct Labor Efficiency Variance

Direct Labor Rate Variance

Wages Payable