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. @ $1.35) $10.80 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 Standard cost per unit $14.44 Overhead rates are computed using practical volume, which is 50,000 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: 407,000 pounds d. Direct labor: 10,500 hours at $17.95 per hour e. Fixed overhead: $36,570 f. Variable overhead: $18,000 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: Cost of Goods Sold Direct Materials Usage Variance Direct Labor Rate Variance Direct Labor Efficiency Variance Direct Materials Price Variance Feedback Check My Work 5. f. The variances are closed to cost of Goods Sold. Then FOH and VOH are recognized. Last, the Control variances are closed to COGS. Second, recognize the overhead variances: Post amounts from highest to lowest. If an amount box does not require an entry, leave it blank. Variable Overhead Control Fixed Overhead Spending Variance Fixed Overhead Control Fixed Overhead Volume Variance Variable Overhead Efficiency Variance Variable Overhead Spending Variance