1. Direct Materials and Direct Labor Variances

   Zoller Company produces a dark chocolate candy bar. Recently, the company adopted the following standards for one bar of the candy:

   Direct materials (6.30 oz. @ $0.20)	$1.26
   Direct labor (0.08 hr. @ $18.00)	1.44
   Standard prime cost	$2.70

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

   1. Bars produced: 142,000.
   2. Ounces of direct materials purchased: 894,900 ounces at $0.21 per ounce.
   3. There are no beginning or ending inventories of direct materials.
   4. Direct labor: 11,220 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 Unfavorable Not applicable
   Materials Usage Variance	$	Favorable Unfavorable Not applicable

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

   Labor Rate Variance	$	Favorable Unfavorable Not applicable
   Labor Efficiency Variance	$	Favorable Unfavorable Not applicable

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

   	Accounts Payable Cash Direct Labor Efficiency Variance Direct Materials Usage Variance Materials Work in Process
   	Accounts Payable Direct Labor Efficiency Variance Direct Materials Price Variance Direct Materials Usage Variance Wages Payable Work in Process
   	Accounts Payable Cash Direct Labor Efficiency Variance Direct Materials Usage Variance Materials Wages Payable
   	Record purchase of materials
   	Cash Direct Labor Efficiency Variance Direct Materials Price Variance Materials Wages Payable Work in Process
   	Accounts Payable Direct Labor Efficiency Variance Direct Materials Price Variance Direct Materials Usage Variance Materials Wages Payable
   	Accounts Payable Direct Materials Price Variance Direct Materials Usage Variance Materials Wages Payable Work in Process
   	Record usage of materials
   	Accounts Payable Direct Materials Price Variance Direct Materials Usage Variance Materials Wages Payable Work in Process
   	Accounts Payable Cash Direct Labor Rate Variance Direct Materials Price Variance Direct Materials Usage Variance Materials
   	Accounts Payable Cash Direct Labor Efficiency Variance Direct Materials Price Variance Direct Materials Usage Variance Materials
   	Accounts Payable Direct Materials Price Variance Direct Materials Usage Variance Materials Wages Payable Wages Expense
   	Record labor variances

Answer rating: 100% (QA)

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