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:

1. Units produced: 53,000
2. Direct materials purchased: 275,000 pounds at $2.50 per pound
3. Direct materials used: 270,200 pounds
4. Direct labor: 40,100 hours at $17.95 per hour
5. Fixed overhead: $161,600
6. Variable overhead: $121,900

Required:

1. Compute price and usage variances for direct materials.

MPV	$	Favorable
MUV	$	Unfavorable

2. Compute the direct labor rate and labor efficiency variances.

Labor Rate Variance	$	Favorable
Labor Efficiency Variance	$	Unfavorable

3. Compute the fixed overhead spending and volume variances.

Spending Variance	$	Favorable
Volume Variance	$	Unfavorable

4. Compute the variable overhead spending and efficiency variances.

Spending Variance	$	Unfavorable
Efficiency Variance	$	Unfavorable