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) $10.40 Direct labor (0.15 hr. @ $18.00) 2.70 Fixed overhead (0.20 hr. @ $3.00) 0.60 Variable overhead (0.20 hr. @ $1.70) 0.34 $14.04 Standard cost per unit Overhead rates are computed using practical volume, which is 51,000 units. The actual results for the year are as follows: a. Units produced: 53,000 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: $36,570 f. Variable overhead: $18,000 Required: 1. Compute price and usage variances for direct materials. MPV MUV 12,240 X Favorable 23,220 X Favorable 2. Compute the direct labor rate and labor efficiency variances. Labor Rate Variance Labor Efficiency Variance 525 Favorable 45,900 Favorable 3. Compute the fixed overhead spending and volume variances. Spending Variance Volume Variance 19,910 X 1,360 X Unfavorable Favorable 4. Compute the variable overhead spending and efficiency variances. Spending Variance Efficiency Variance 13,545 X Favorable 300 X Favorable 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. b. C. d. e. f. Prepare journal entries for the closing out of variances to Cost of Goods Sold. Post amounts from highest to lowest. If an amount box does not require an entry, leave it blank. First, close direct materials and direct labor variances: Feedback Second, recognize the overhead variances: Post amounts from highest to lowest. If an amount box does not require an entry, leave it blank. Feedback Third, close the overhead variances: Post amounts from highest to lowest. If an amount box does not require an entry, leave it blank