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: 274,000 pounds at $2.50 per pound
Direct materials used: 270,400 pounds
Direct labor: 40,100 hours at $17.95 per hour
Fixed overhead: $161,800
Variable overhead: $122,000
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 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started