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 49,000 units The actual results for the year are as follows Units produced 53,000 Direct materials purchased 408,000 pounds at $1 32 per pound Direct materials used 406,800 pounds Direct labor 10,500 hours at $17 95 per hour Fixed overhead $36,570 Variable overhead $18,000 Required 1 Compute price and usage variances for direct materials MPV $fill in the blank 153fb1fb804505e 1 FavorableUnfavorable MUV $fill in the blank 153fb1fb804505e 3 FavorableUnfavorable 2 Compute the direct labor rate and labor efficiency variances Labor Rate Variance $fill in the blank 153fb1fb804505e 5 FavorableUnfavorable Labor Efficiency Variance $fill in the blank 153fb1fb804505e 7 FavorableUnfavorable 3 Compute the fixed overhead spending and volume variances Spending Variance $fill in the blank 153fb1fb804505e 9 FavorableUnfavorable Volume Variance $fill in the blank 153fb1fb804505e 11 FavorableUnfavorable 4 Compute the variable overhead spending and efficiency variances Spending Variance $fill in the blank 153fb1fb804505e 13 FavorableUnfavorable Efficiency Variance $fill in the blank 153fb1fb804505e 15 FavorableUnfavorable 5 Prepare journal entries for the following The purchase of direct materials The issuance of direct materials to production (Work in Process) The addition of direct labor to Work in Process The addition of overhead to Work in Process The incurrence of actual overhead costs If an amount box does not require an entry, leave it blank a Accounts PayableDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price VarianceMaterials Select Select Direct Materials Price VarianceDirect Materials Usage VarianceFixed Overhead ControlMaterialsVarious Accounts Select Select Accounts PayableDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Usage VarianceFixed Overhead Control Select Select b MaterialsVariable Overhead ControlVarious AccountsWages PayableWork in Process Select Select Direct Materials Price VarianceDirect Materials Usage VarianceFixed Overhead ControlMaterialsVarious Accounts Select Select Accounts PayableDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price VarianceMaterials Select Select c MaterialsVariable Overhead ControlVarious AccountsWages PayableWork in Process Select Select Direct Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage VarianceFixed Overhead Control Select Select Direct Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage VarianceFixed Overhead ControlMaterials Select Select Fixed Overhead ControlMaterialsVariable Overhead ControlVarious AccountsWages Payable Select Select d Accounts PayableDirect Labor Efficiency VarianceDirect Labor Rate VarianceWages PayableWork in Process Select Select Direct Materials Price VarianceDirect Materials Usage VarianceMaterialsVarious AccountsVariable Overhead Control Select Select Fixed Overhead ControlMaterialsVarious AccountsWages PayableWork in Process Select Select e MaterialsVariable Overhead ControlVarious AccountsWages PayableWork in Process Select Select Fixed Overhead ControlMaterialsVarious AccountsWages PayableWork in Process Select Select Accounts PayableDirect Labor Efficiency VarianceDirect Labor Rate VarianceMaterialsVarious Accounts Select Select 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 SoldDirect Labor Rate VarianceDirect Materials Price VarianceVariable Overhead ControlVariable Overhead Spending Variance Select Select Direct Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage VarianceVariable Overhead ControlVariable Overhead Spending Variance Select Select Cost of Goods SoldDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Usage Variance Select Select Direct Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price VarianceVariable Overhead ControlVariable Overhead Spending Variance Select Select Cost of Goods SoldDirect Labor Efficiency VarianceDirect Materials Price VarianceDirect Materials Usage Variance Select Select Second, recognize the overhead variances Post amounts from highest to lowest If an amount box does not require an entry, leave it blank Cost of Goods SoldFixed Overhead Volume VarianceVariable Overhead ControlVariable Overhead Efficiency VarianceVariable Overhead Spending Variance Select Select Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlFixed Overhead Spending VarianceWork in Process Select Select Cost of Goods SoldFixed Overhead ControlFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending Variance Select Select Cost of Goods SoldFixed Overhead ControlFixed Overhead Volume VarianceVariable Overhead ControlWork in Process Select Select Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending Variance Select Select Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Spending VarianceWork in Process Select Select Third, close the overhead variances Post amounts from highest to lowest If an amount box does not require an entry, leave it blank Cost of Goods SoldFixed Overhead ControlFixed Overhead Volume VarianceVariable Overhead ControlWork in Process Select Select Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Efficiency VarianceWork in Process Select Select Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Spending VarianceWork in Process Select Select Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending Variance Select Select Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending Variance Select Select

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 21, 2024

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

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 49,000 units. The actual results for the year are as follows:

Units produced: 53,000
Direct materials purchased: 408,000 pounds at $1.32 per pound
Direct materials used: 406,800 pounds
Direct labor: 10,500 hours at $17.95 per hour
Fixed overhead: $36,570
Variable overhead: $18,000

Required:

1. Compute price and usage variances for direct materials.

MPV	$fill in the blank 153fb1fb804505e_1	FavorableUnfavorable
MUV	$fill in the blank 153fb1fb804505e_3	FavorableUnfavorable

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

Labor Rate Variance	$fill in the blank 153fb1fb804505e_5	FavorableUnfavorable
Labor Efficiency Variance	$fill in the blank 153fb1fb804505e_7	FavorableUnfavorable

3. Compute the fixed overhead spending and volume variances.

Spending Variance	$fill in the blank 153fb1fb804505e_9	FavorableUnfavorable
Volume Variance	$fill in the blank 153fb1fb804505e_11	FavorableUnfavorable

4. Compute the variable overhead spending and efficiency variances.

Spending Variance	$fill in the blank 153fb1fb804505e_13	FavorableUnfavorable
Efficiency Variance	$fill in the blank 153fb1fb804505e_15	FavorableUnfavorable

5. Prepare journal entries for the following:

The purchase of direct materials
The issuance of direct materials to production (Work in Process)
The addition of direct labor to Work in Process
The addition of overhead to Work in Process
The incurrence of actual overhead costs

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

a.	Accounts PayableDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price VarianceMaterials	- Select -	- Select -
	Direct Materials Price VarianceDirect Materials Usage VarianceFixed Overhead ControlMaterialsVarious Accounts	- Select -	- Select -
	Accounts PayableDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Usage VarianceFixed Overhead Control	- Select -	- Select -
b.	MaterialsVariable Overhead ControlVarious AccountsWages PayableWork in Process	- Select -	- Select -
	Direct Materials Price VarianceDirect Materials Usage VarianceFixed Overhead ControlMaterialsVarious Accounts	- Select -	- Select -
	Accounts PayableDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price VarianceMaterials	- Select -	- Select -
c.	MaterialsVariable Overhead ControlVarious AccountsWages PayableWork in Process	- Select -	- Select -
	Direct Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage VarianceFixed Overhead Control	- Select -	- Select -
	Direct Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage VarianceFixed Overhead ControlMaterials	- Select -	- Select -
	Fixed Overhead ControlMaterialsVariable Overhead ControlVarious AccountsWages Payable	- Select -	- Select -
d.	Accounts PayableDirect Labor Efficiency VarianceDirect Labor Rate VarianceWages PayableWork in Process	- Select -	- Select -
	Direct Materials Price VarianceDirect Materials Usage VarianceMaterialsVarious AccountsVariable Overhead Control	- Select -	- Select -
	Fixed Overhead ControlMaterialsVarious AccountsWages PayableWork in Process	- Select -	- Select -
e.	MaterialsVariable Overhead ControlVarious AccountsWages PayableWork in Process	- Select -	- Select -
	Fixed Overhead ControlMaterialsVarious AccountsWages PayableWork in Process	- Select -	- Select -
	Accounts PayableDirect Labor Efficiency VarianceDirect Labor Rate VarianceMaterialsVarious Accounts	- Select -	- Select -

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 SoldDirect Labor Rate VarianceDirect Materials Price VarianceVariable Overhead ControlVariable Overhead Spending Variance	- Select -	- Select -
Direct Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage VarianceVariable Overhead ControlVariable Overhead Spending Variance	- Select -	- Select -
Cost of Goods SoldDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Usage Variance	- Select -	- Select -
Direct Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price VarianceVariable Overhead ControlVariable Overhead Spending Variance	- Select -	- Select -
Cost of Goods SoldDirect Labor Efficiency VarianceDirect Materials Price VarianceDirect Materials Usage Variance	- Select -	- Select -

Second, recognize the overhead variances: Post amounts from highest to lowest. If an amount box does not require an entry, leave it blank.

Cost of Goods SoldFixed Overhead Volume VarianceVariable Overhead ControlVariable Overhead Efficiency VarianceVariable Overhead Spending Variance	- Select -	- Select -
Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlFixed Overhead Spending VarianceWork in Process	- Select -	- Select -
Cost of Goods SoldFixed Overhead ControlFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending Variance	- Select -	- Select -
Cost of Goods SoldFixed Overhead ControlFixed Overhead Volume VarianceVariable Overhead ControlWork in Process	- Select -	- Select -
Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending Variance	- Select -	- Select -
Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Spending VarianceWork in Process	- Select -	- Select -

Third, close the overhead variances: Post amounts from highest to lowest. If an amount box does not require an entry, leave it blank.

Cost of Goods SoldFixed Overhead ControlFixed Overhead Volume VarianceVariable Overhead ControlWork in Process	- Select -	- Select -
Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Efficiency VarianceWork in Process	- Select -	- Select -
Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Spending VarianceWork in Process	- Select -	- Select -
Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending Variance	- Select -	- Select -
Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending Variance	- Select -	- Select -