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 (8.30 oz. @ $0.09)	$0.75
Direct labor (0.07 hr. @ $18.00)	1.26
Standard prime cost	$2.01

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

1. Bars produced: 142,000.
2. Ounces of direct materials purchased: 1,178,900 ounces at $0.08 per ounce.
3. There are no beginning or ending inventories of direct materials.
4. Direct labor: 9,800 hours at $17.20.

Required:

Question Content Area

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	$fill in the blank e4efd2fa3077fba_1	FavorableUnfavorableNot applicable
Materials Usage Variance	$fill in the blank e4efd2fa3077fba_3	FavorableUnfavorableNot applicable

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

Labor Rate Variance	$fill in the blank e4efd2fa3077fba_5	FavorableUnfavorableNot applicable
Labor Efficiency Variance	$fill in the blank e4efd2fa3077fba_7	FavorableUnfavorableNot applicable

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.

	Accounts PayableCashDirect Labor Efficiency VarianceDirect Materials Usage VarianceMaterialsWork in Process	- Select -	- Select -
	Accounts PayableDirect Labor Efficiency VarianceDirect Materials Price VarianceDirect Materials Usage VarianceWages PayableWork in Process	- Select -	- Select -
	Accounts PayableCashDirect Labor Efficiency VarianceDirect Materials Usage VarianceMaterialsWages Payable	- Select -	- Select -
	Record purchase of materials
	CashDirect Labor Efficiency VarianceDirect Materials Price VarianceMaterialsWages PayableWork in Process	- Select -	- Select -
	Accounts PayableDirect Labor Efficiency VarianceDirect Materials Price VarianceDirect Materials Usage VarianceMaterialsWages Payable	- Select -	- Select -
	Accounts PayableDirect Materials Price VarianceDirect Materials Usage VarianceMaterialsWages PayableWork in Process	- Select -	- Select -
	Record usage of materials
	Accounts PayableDirect Materials Price VarianceDirect Materials Usage VarianceMaterialsWages PayableWork in Process	- Select -	- Select -
	Accounts PayableCashDirect Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage VarianceMaterials	- Select -	- Select -
	Accounts PayableCashDirect Labor Efficiency VarianceDirect Materials Price VarianceDirect Materials Usage VarianceMaterials	- Select -	- Select -
	Accounts PayableDirect Materials Price VarianceDirect Materials Usage VarianceMaterialsWages PayableWages Expense	- Select -	- Select -
	Record labor variances