Question
Direct Materials, Direct Labor, and Overhead Variances, Journal Entries Algers Company produces dry fertilizer. At the beginning of the year, Algers had the following standard
Direct Materials, Direct Labor, and Overhead Variances, Journal Entries
Algers Company produces dry fertilizer. At the beginning of the year, Algers had the following standard cost sheet:
| Direct materials (5 lbs. @ $2.60) | $13.00 |
| Direct labor (0.75 hr. @ $18.00) | 13.50 |
| Fixed overhead (0.75 hr. @ $4.00) | 3.00 |
| Variable overhead (0.75 hr. @ $3.00) | 2.25 |
| Standard cost per unit | $31.75 |
Algers computes its overhead rates using practical volume, which is 54,000 units. The actual results for the year are as follows:
- Units produced: 53,000
- Direct materials purchased: 273,000 pounds at $2.50 per pound
- Direct materials used: 270,300 pounds
- Direct labor: 40,100 hours at $17.95 per hour
- Fixed overhead: $161,700
- Variable overhead: $122,000
Required:
1. Compute price and usage variances for direct materials.
| MPV | $fill in the blank 9afca2f45057019_1 | Favorable |
| MUV | $fill in the blank 9afca2f45057019_3 | Unfavorable |
2. Compute the direct labor rate and labor efficiency variances.
| Labor Rate Variance | $fill in the blank 9afca2f45057019_5 | Favorable |
| Labor Efficiency Variance | $fill in the blank 9afca2f45057019_7 | Unfavorable |
3. Compute the fixed overhead spending and volume variances.
| Spending Variance | $fill in the blank 9afca2f45057019_9 | Favorable |
| Volume Variance | $fill in the blank 9afca2f45057019_11 | Unfavorable |
4. Compute the variable overhead spending and efficiency variances.
| Spending Variance | $fill in the blank 9afca2f45057019_13 | Unfavorable |
| Efficiency Variance | $fill in the blank 9afca2f45057019_15 | Unfavorable |
Feedback
5. Prepare journal entries for the following:
- The purchase of direct materials
- The issuance of direct materials to production (Work in Process)
- The addition of direct labor to Work in Process
- The addition of overhead to Work in Process
- The incurrence of actual overhead costs
If an amount box does not require an entry, leave it blank.
| a. | Materials | fill in the blank 73a8b8f8bf96fa8_2 | fill in the blank 73a8b8f8bf96fa8_3 |
| Direct Materials Price Variance | fill in the blank 73a8b8f8bf96fa8_5 | fill in the blank 73a8b8f8bf96fa8_6 | |
| Accounts Payable | fill in the blank 73a8b8f8bf96fa8_8 | fill in the blank 73a8b8f8bf96fa8_9 | |
| b. | Work in Process | fill in the blank 73a8b8f8bf96fa8_11 | fill in the blank 73a8b8f8bf96fa8_12 |
| Direct Materials Usage Variance | fill in the blank 73a8b8f8bf96fa8_14 | fill in the blank 73a8b8f8bf96fa8_15 | |
| Materials | fill in the blank 73a8b8f8bf96fa8_17 | fill in the blank 73a8b8f8bf96fa8_18 | |
| c. | Work in Process | fill in the blank 73a8b8f8bf96fa8_20 | fill in the blank 73a8b8f8bf96fa8_21 |
| Direct Labor Efficiency Variance | fill in the blank 73a8b8f8bf96fa8_23 | fill in the blank 73a8b8f8bf96fa8_24 | |
| Direct Labor Rate Variance | fill in the blank 73a8b8f8bf96fa8_26 | fill in the blank 73a8b8f8bf96fa8_27 | |
| Wages Payable | fill in the blank 73a8b8f8bf96fa8_29 | fill in the blank 73a8b8f8bf96fa8_30 | |
| d. | Work in Process | fill in the blank 73a8b8f8bf96fa8_32 | fill in the blank 73a8b8f8bf96fa8_33 |
| Variable Overhead Control | fill in the blank 73a8b8f8bf96fa8_35 | fill in the blank 73a8b8f8bf96fa8_36 | |
| Fixed Overhead Control | fill in the blank 73a8b8f8bf96fa8_38 | fill in the blank 73a8b8f8bf96fa8_39 | |
| e. | Variable Overhead Control | fill in the blank 73a8b8f8bf96fa8_41 | fill in the blank 73a8b8f8bf96fa8_42 |
| Fixed Overhead Control | fill in the blank 73a8b8f8bf96fa8_44 | fill in the blank 73a8b8f8bf96fa8_45 | |
| Various Accounts | fill in the blank 73a8b8f8bf96fa8_47 | fill in the blank 73a8b8f8bf96fa8_48 |
Feedback
f. Prepare journal entries for the closing out of variances to Cost of Goods Sold. If an amount box does not require an entry, leave it blank.
First, close direct materials and direct labor variances:
| Direct Materials Price Variance | fill in the blank e69d01028053f7f_2 | fill in the blank e69d01028053f7f_3 | |
| Direct Labor Rate Variance | fill in the blank e69d01028053f7f_5 | fill in the blank e69d01028053f7f_6 | |
| Direct Materials Usage Variance | fill in the blank e69d01028053f7f_8 | fill in the blank e69d01028053f7f_9 | |
| Direct Labor Efficiency Variance | fill in the blank e69d01028053f7f_11 | fill in the blank e69d01028053f7f_12 | |
| Cost of Goods Sold | fill in the blank e69d01028053f7f_14 | fill in the blank e69d01028053f7f_15 |
Feedback
Second, recognize the overhead variances: If an amount box does not require an entry, leave it blank.
| Fixed Overhead Volume Variance | fill in the blank 94f59000ffa7f86_2 | fill in the blank 94f59000ffa7f86_3 | |
| Variable Overhead Spending Variance | fill in the blank 94f59000ffa7f86_5 | fill in the blank 94f59000ffa7f86_6 | |
| Variable Overhead Efficiency Variance | fill in the blank 94f59000ffa7f86_8 | fill in the blank 94f59000ffa7f86_9 | |
| Fixed Overhead Spending Variance | fill in the blank 94f59000ffa7f86_11 | fill in the blank 94f59000ffa7f86_12 | |
| Fixed Overhead Control | fill in the blank 94f59000ffa7f86_14 | fill in the blank 94f59000ffa7f86_15 | |
| Variable Overhead Control | fill in the blank 94f59000ffa7f86_17 | fill in the blank 94f59000ffa7f86_18 |
Feedback
Third, close the overhead variances: Note: Close the variances with a debit balance first. For compound entries, if an amount box does not require an entry, leave it blank.
| Cost of Goods Sold | fill in the blank 57ff9f0a500c021_2 | fill in the blank 57ff9f0a500c021_3 | |
| Fixed Overhead Volume Variance | fill in the blank 57ff9f0a500c021_5 | fill in the blank 57ff9f0a500c021_6 | |
| Variable Overhead Spending Variance | fill in the blank 57ff9f0a500c021_8 | fill in the blank 57ff9f0a500c021_9 | |
| Variable Overhead Efficiency Variance | fill in the blank 57ff9f0a500c021_11 | fill in the blank 57ff9f0a500c021_12 | |
| Fixed Overhead Spending Variance | fill in the blank 57ff9f0a500c021_14 | ||
| Cost of Goods Sold | fill in the blank 57ff9f0a500c021_16 |
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