Question
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
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 (0.07 hr. @ $18.00) | 1.26 |
Standard prime cost | $2.00 |
During the first week of operation, the company experienced the following actual results:
- Bars produced: 141,000.
- Ounces of direct materials purchased: 1,156,500 ounces at $0.08 per ounce.
- There are no beginning or ending inventories of direct materials.
- Direct labor: 9,730 hours at $17.20.
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 | $____ | Favorable |
Materials Usage Variance | $___ | Unfavorable |
2. Compute the rate variance and the efficiency variance for direct labor.
Labor Rate Variance | $___ | Favorable |
Labor Efficiency Variance | $___ | Favorable |
3. Prepare the journal entries associated with direct materials and direct labor. If an amount box does not require an entry, leave it blank.
Materials | ___ | ____ | |
Direct Materials Price Variance | ___ | ____ | |
Accounts Payable | ____ | ___ | |
Record purchase of materials | |||
Work in Process | ___ | ____ | |
Direct Materials Usage Variance | ___ | ___ | |
Materials | ___ | ___ | |
Record usage of materials | |||
Work in Process | ___ | ___ | |
Direct Labor Rate Variance | ____ | ____ | |
Direct Labor Efficiency Variance | ___ | ___ | |
Wages Payable | ___ | ___ | |
Record labor variances |
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