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 $(8\mathrm{.}20$ oz$.$ @ $$0\mathrm{.}09)$ $$0\mathrm{.}74$

Direct labor $(0\mathrm{.}09$ hr$.$ @ $$18\mathrm{.}00)1\mathrm{.}62$

Standard prime cost $$2\mathrm{.}36$

During the first week of operation, the company experienced the following actual results:

Bars produced: $144,000.$

Ounces of direct materials purchased: $1,181,100$ ounces at $$0\mathrm{.}08$ per ounce.

There are no beginning or ending inventories of direct materials.

Direct labor: $12,820$ hours at $$17\mathrm{.}20.$Compute price and usage variances for direct materials.

Materials Price Variance

$

Favorable

Materials Usage Variance

$

Favorable

Compute the rate variance and the efficiency variance for direct labor.

Labor Rate Variance

Labor Efficiency Variance

Favorable

Prepare the journal entries associated with direct materials and direct labor. If an amount box does not require an entry, leave it blank.

Accounts Payable

Record purchase of materials

Work in Process

Materials $x$

Record usage of materials

Work in Process

Wages Payable