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: a. Units produced: 53,000 b. Direct materials purchased: 273,000 pounds at $2.50 per pound c. Direct materials used: 270,300 pounds d. Direct labor: 40,100 hours at $17.95 per hour e. Fixed overhead: $161,700 f. Variable overhead: $122,100 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 Feedback 5. Prepare journal entries for the following: a. The purchase of direct materials b. The issuance of direct materials to production (Work in Process) c. The addition of direct labor to Work in Process d. The addition of overhead to Work in Process e. The incurrence of actual overhead costs If an amount box does not require an entry, leave it blank. a. Materials Direct Materials Price Variance Accounts Payable lll lll bil 100 b. Work in Process Direct Materials Usage Variance Materials C Work in Process Second, recognize the overhead variances: If an amount box does not require an entry, leave blank. Fixed Overhead Volume Variance Variable Overhead Spending Variance Variable Overhead Efficiency Variance Fixed Overhead Spending Variance Fixed Overhead Control Variable Overhead Control 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 blank. Cost of Goods Sold Fixed Overhead Volume Variance Variable Overhead Spending Variance lllll llll Variable Overhead Efficiency Variance Fixed Overhead Spending Variance Cost of Goods Sold