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: 270,300 pounds
4. Direct labor: 40,100 hours at $17.95 per hour
5. Fixed overhead: $161,700
6. Variable overhead: $122,000

Required:

1. Compute price and usage variances for direct materials.

MPV	$fill in the blank 9af1abfadfa507a_1
MUV	$fill in the blank 9af1abfadfa507a_3

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

Labor Rate Variance	$fill in the blank 9af1abfadfa507a_5
Labor Efficiency Variance	$fill in the blank 9af1abfadfa507a_7

3. Compute the fixed overhead spending and volume variances.

Spending Variance	$fill in the blank 9af1abfadfa507a_9
Volume Variance	$fill in the blank 9af1abfadfa507a_11

4. Compute the variable overhead spending and efficiency variances.

Spending Variance	$fill in the blank 9af1abfadfa507a_13
Efficiency Variance	$fill in the blank 9af1abfadfa507a_15

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5. Prepare journal entries for the following:

1. The purchase of direct materials
2. The issuance of direct materials to production (Work in Process)
3. The addition of direct labor to Work in Process
4. The addition of overhead to Work in Process
5. The incurrence of actual overhead costs

If an amount box does not require an entry, leave it blank.

a.		fill in the blank 136365071fa9fc4_2	fill in the blank 136365071fa9fc4_3
		fill in the blank 136365071fa9fc4_5	fill in the blank 136365071fa9fc4_6
		fill in the blank 136365071fa9fc4_8	fill in the blank 136365071fa9fc4_9
b.		fill in the blank 136365071fa9fc4_11	fill in the blank 136365071fa9fc4_12
		fill in the blank 136365071fa9fc4_14	fill in the blank 136365071fa9fc4_15
		fill in the blank 136365071fa9fc4_17	fill in the blank 136365071fa9fc4_18
c.		fill in the blank 136365071fa9fc4_20	fill in the blank 136365071fa9fc4_21
		fill in the blank 136365071fa9fc4_23	fill in the blank 136365071fa9fc4_24
		fill in the blank 136365071fa9fc4_26	fill in the blank 136365071fa9fc4_27
		fill in the blank 136365071fa9fc4_29	fill in the blank 136365071fa9fc4_30
d.		fill in the blank 136365071fa9fc4_32	fill in the blank 136365071fa9fc4_33
		fill in the blank 136365071fa9fc4_35	fill in the blank 136365071fa9fc4_36
		fill in the blank 136365071fa9fc4_38	fill in the blank 136365071fa9fc4_39
e.		fill in the blank 136365071fa9fc4_41	fill in the blank 136365071fa9fc4_42
		fill in the blank 136365071fa9fc4_44	fill in the blank 136365071fa9fc4_45
		fill in the blank 136365071fa9fc4_47	fill in the blank 136365071fa9fc4_48

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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:

		fill in the blank 6aae5206dff2067_2	fill in the blank 6aae5206dff2067_3
		fill in the blank 6aae5206dff2067_5	fill in the blank 6aae5206dff2067_6
		fill in the blank 6aae5206dff2067_8	fill in the blank 6aae5206dff2067_9
		fill in the blank 6aae5206dff2067_11	fill in the blank 6aae5206dff2067_12
		fill in the blank 6aae5206dff2067_14	fill in the blank 6aae5206dff2067_15

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Second, recognize the overhead variances: If an amount box does not require an entry, leave it blank.

		fill in the blank 0f2e84ff8015fdd_2	fill in the blank 0f2e84ff8015fdd_3
		fill in the blank 0f2e84ff8015fdd_5	fill in the blank 0f2e84ff8015fdd_6
		fill in the blank 0f2e84ff8015fdd_8	fill in the blank 0f2e84ff8015fdd_9
		fill in the blank 0f2e84ff8015fdd_11	fill in the blank 0f2e84ff8015fdd_12
		fill in the blank 0f2e84ff8015fdd_14	fill in the blank 0f2e84ff8015fdd_15
		fill in the blank 0f2e84ff8015fdd_17	fill in the blank 0f2e84ff8015fdd_18

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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.

		fill in the blank 0e7d2a06dfacfc7_2	fill in the blank 0e7d2a06dfacfc7_3
		fill in the blank 0e7d2a06dfacfc7_5	fill in the blank 0e7d2a06dfacfc7_6
		fill in the blank 0e7d2a06dfacfc7_8	fill in the blank 0e7d2a06dfacfc7_9
		fill in the blank 0e7d2a06dfacfc7_11	fill in the blank 0e7d2a06dfacfc7_12
		fill in the blank 0e7d2a06dfacfc7_14
			fill in the blank 0e7d2a06dfacfc7_16