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 (8.2 oz. @ $0.09)	$0.738
Direct labor (0.07 hr. @ $18.00)	1.26
Standard prime cost	$1.998

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

1. Bars produced: 78,000.
2. Ounces of direct materials purchased: 640,000 ounces at $0.084 per ounce.
3. There are no beginning or ending inventories of direct materials.
4. Direct labor: 5,510 hours at $18.

Required:

Question Content Area

1. Compute price and usage variances for direct materials.

Materials Price Variance	$fill in the blank 3730aafc3fdaf91_1	FavorableUnfavorableNo ChangeFavorable
Materials Usage Variance	$fill in the blank 3730aafc3fdaf91_3	FavorableUnfavorableNo ChangeUnfavorable

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

Labor Rate Variance	$fill in the blank 3730aafc3fdaf91_5	FavorableUnfavorableNo ChangeNo Change
Labor Efficiency Variance	$fill in the blank 3730aafc3fdaf91_7	FavorableUnfavorableNo ChangeUnfavorable

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Feedback

1. MPV=(AP-SP)AQ

2. LRV=(AR-SR)AH; LEV=(AH-SH)SR; SH=actual production x direct labor hours per unit

Question Content Area

3. Prepare the journal entries associated with direct materials and direct labor. If an amount box does not require an entry, leave it blank. If an amount is zero, enter "0".

blank	Record purchase of materials	blank	blank
	Accounts PayableCashDirect Labor Efficiency VarianceDirect Materials Usage VarianceMaterialsWork in ProcessMaterials
	Accounts PayableDirect Labor Efficiency VarianceDirect Materials Price VarianceDirect Materials Usage VarianceWages PayableWork in ProcessDirect Materials Price Variance
	Accounts PayableCashDirect Labor Efficiency VarianceDirect Materials Usage VarianceMaterialsWages PayableAccounts Payable
	Record usage of materials
blank	CashDirect Labor Efficiency VarianceDirect Materials Price VarianceMaterialsWages PayableWork in ProcessWork in Process
	Accounts PayableDirect Labor Efficiency VarianceDirect Materials Price VarianceDirect Materials Usage VarianceMaterialsWages PayableDirect Materials Usage Variance
	Accounts PayableDirect Materials Price VarianceDirect Materials Usage VarianceMaterialsWages PayableWork in ProcessMaterials
	Record labor variances
blank	Accounts PayableDirect Materials Price VarianceDirect Materials Usage VarianceMaterialsWages PayableWork in ProcessWork in Process
	Accounts PayableCashDirect Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage VarianceMaterialsDirect Labor Rate Variance
	Accounts PayableCashDirect Labor Efficiency VarianceDirect Materials Price VarianceDirect Materials Usage VarianceMaterialsDirect Labor Efficiency Variance
	Accounts PayableDirect Materials Price VarianceDirect Materials Usage VarianceMaterialsWages PayableWages ExpenseWages Payable