Direct Materials, Direct Labor, and Overhead Variances, Journal Entries Rand Company produces dry fertilizer. At the beginning of the year, Rand had the following standard cost sheet: Direct materials (8 lbs. @ $1.30) Direct labor (0.2 hr. @ $18.00) Fixed overhead (0.2 @ $3.00) Variable overhead (0.2 hr. @ $1.70) Standard cost per unit $10.40 3.60 0.60 0.34 $14.94 Overhead rates are computed using practical volume, which is 50,000 units. The actual results for the year are as follows: a. Units produced: 51,000 b. Direct materials purchased: 408,000 pounds at $1.32 per pound c. Direct materials used: 406,800 pounds d. Direct labor: 10,500 hours at $17.95 per hour e. Fixed overhead: $30,680 f. Variable overhead: $18,000 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 LUT b. Work in Process Direct Materials Usage Variance Materials C. Work in Process Direct Labor Efficiency Variance Direct Labor Rate Variance Wages Payable d. Work in Process Variable Overhead Control Fixed Overhead Control 000 0000 000 000 000 e. Variable Overhead Control Fixed Overhead Control Various Accounts Feedback Check My Work 5. a. Material purchases are accounted for by debiting Materials and crediting Accounts Pa b. Direct materials are applied to production by debiting Work in Process and crediting Mat c. Direct labor is applied to Work in Process by debiting that account and crediting Wages d. OH is applied to production by debiting Work in Process and crediting the variable and fi e. The actual OH is accumulated on the debit side of the OH control accounts. f. Prepare journal entries for the closing out of variances to Cost of Goods Sold. Post amounts f First, close direct materials and direct labor variances: Cost of Goods Sold Direct Labor Rate Variance Direct Materials Usage Variance Direct Materials Price Variance Direct Labor Rate Variance Feedback Second, recognize the overhead variances: Post amounts from highest to lowest. If an amount box does not require an entry, leave it blank. Fixed Overhead Spending Variance Fixed Overhead Control Fixed Overhead Volume Variance Variable Overhead Control Variable Overhead Spending Variance Variable Overhead Spending Variance X Feedback Check My Work Partially correct Third, close the overhead variances: Post amounts from highest to lowest. Combine all amounts to COGS and post as a single amount. If an amount box does not require an entry, leave it blank. Cost of Goods Sold Fixed Overhead Volume Variance Fixed Overhead Spending Variance Variable Overhead Efficiency Variance Variable Overhead Spending Variance Feedback