Direct Materials and Direct Labor Variances Berner Company produces a dark chocolate candy bar. Recently, the company adopted the following standards for one bar of the candy: Direct materials (8.20 oz. @ $0.09) $0.74 Direct labor (0.09 hr. @ $18.00) 1.62 Standard prime cost $2.36 During the first week of operation, the company experienced the following actual results: a. Bars produced: 141,000. b. Ounces of direct materials purchased: 1,156,500 ounces at $0.08 per ounce. c. There are no beginning or ending inventories of direct materials. d. Direct labor: 12,550 hours at $17.30. Required: Instructions for parts 1 and 2: If a variance is zero, enter "0" and select "Not applicable" from the drop down box. 1. Compute price and usage variances for direct materials. Materials Price Variance 9,037 X Materials Usage Variance 27 2. Compute the rate variance and the efficiency variance for direct labor. Labor Rate Variance 9,037 x Labor Efficiency Variance $ 9,037 x Feedback Check My Work 1. MPV=(AP-SP)AQ 2. LRV=(AR-SR)AH; LEV=(AH-SH)SR; SH=actual production x direct labor hours per unit 3. Prepare the journal entries associated with direct materials and direct labor. If an amount box does not require an entry, leave it blank. 107,037 x 107,037 X 107,037 x 107,037 X 107,037 X 107,037 x Record purchase of materials 107,037 X 107,037 X 107,037 107,037 X 107,037 X 107,037 X Record usage of materials 107,037 X 107,037 X 107,037 X 107,037 x 107,037 x 107,037 X 107,037 X 107,037 Record labor variances Feedback Check My Work 3. Companies must restate costs and inventories at the end of the year to actual cost. So, variance accounts must be closed out and their balances applied to Cost of Goods Sold (if immaterial) or prorated among Cost of Goods Sold, Work in Process, and Finished Goods