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 2 hr $18 00) 3 60 Fixed overhead (0 2 $3 00) 0 60 Variable overhead (0 2 hr $1 70) 0 34 Standard cost per unit $14 94 Overhead rates are computed using practical volume, which is 50,000 units The actual results for the year are as follows Units produced 51,000 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 $30,680 Variable overhead $18,000 Required Note Enter all variances as positive amounts Question Content Area 1 Compute price and usage variances for direct materials MPV $fill in the blank 0b94ddf50004050 1 Favorable Unfavorable MUV $fill in the blank 0b94ddf50004050 3 Favorable Unfavorable 2 Compute the direct labor rate and labor efficiency variances Labor Rate Variance $fill in the blank 0b94ddf50004050 5 Favorable Unfavorable Labor Efficiency Variance $fill in the blank 0b94ddf50004050 7 Favorable Unfavorable 3 Compute the fixed overhead spending and volume variances Spending Variance $fill in the blank 0b94ddf50004050 9 Favorable Unfavorable Volume Variance $fill in the blank 0b94ddf50004050 11 Favorable Unfavorable 4 Compute the variable overhead spending and efficiency variances Spending Variance $fill in the blank 0b94ddf50004050 13 Favorable Unfavorable Efficiency Variance $fill in the blank 0b94ddf50004050 15 Favorable Unfavorable Question Content Area 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 Payable Direct Labor Efficiency Variance Direct Labor Rate Variance Direct Materials Price Variance Materials Select Select Direct Materials Price Variance Direct Materials Usage Variance Fixed Overhead Control Materials Various Accounts Select Select Accounts Payable Direct Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Usage VarianceFixed Overhead Control Select Select b Materials Variable Overhead Control Various Accounts Wages Payable Work in Process Select Select Direct Materials Price Variance Direct Materials Usage Variance Fixed Overhead ControlMaterialsVarious Accounts Select Select Accounts Payable Direct 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 Question Content Area 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 blank 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 Cost of Goods SoldDirect Labor Efficiency VarianceDirect Materials Price VarianceDirect Materials Usage Variance Select Select Direct Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price VarianceVariable Overhead ControlVariable Overhead Spending Variance Select Select Question Content Area Second, recognize the overhead variances Post amounts from highest to lowest If an amount box does not require an entry, leave it blank blank Cost of Goods SoldFixed Overhead Spending VarianceVariable Overhead ControlVariable Overhead Efficiency VarianceVariable Overhead Spending Variance Select Select Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Efficiency VarianceWork in Process Select Select Cost of Goods SoldFixed Overhead ControlFixed Overhead Volume VarianceVariable Overhead Spending Variance Select Select Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlWork in Process Select Select Cost of Goods SoldFixed Overhead Volume VarianceVariable Overhead Spending VarianceVariable Overhead Volume VarianceVariable Overhead Control Select Select Cost of Goods SoldFixed Overhead ControlFixed Overhead Efficiency VarianceVariable Overhead Spending VarianceWork in Process Select Select Question Content Area 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 blank Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Efficiency VarianceWork in Process Select Select Cost of Goods SoldFixed Overhead Volume VarianceFixed Overhead ControlVariable Overhead Spending VarianceWork in Process Select Select Cost of Goods SoldFixed Overhead ControlFixed Overhead Spending VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending Variance Select Select Cost of Goods SoldFixed Overhead ControlFixed Overhead Spending VarianceFixed Overhead Spending VarianceVariable Overhead Efficiency Variance Select Select

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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. @ $1.30)	$10.40
Direct labor (0.2 hr. @ $18.00)	3.60
Fixed overhead (0.2 @ $3.00)	0.60
Variable overhead (0.2 hr. @ $1.70)	0.34
Standard cost per unit	$14.94

Overhead rates are computed using practical volume, which is 50,000 units. The actual results for the year are as follows:

Units produced: 51,000
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: $30,680
Variable overhead: $18,000

Required:

Note: Enter all variances as positive amounts.

Question Content Area

1. Compute price and usage variances for direct materials.

MPV	$fill in the blank 0b94ddf50004050_1	Favorable Unfavorable
MUV	$fill in the blank 0b94ddf50004050_3	Favorable Unfavorable

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

Labor Rate Variance	$fill in the blank 0b94ddf50004050_5	Favorable Unfavorable
Labor Efficiency Variance	$fill in the blank 0b94ddf50004050_7	Favorable Unfavorable

3. Compute the fixed overhead spending and volume variances.

Spending Variance	$fill in the blank 0b94ddf50004050_9	Favorable Unfavorable
Volume Variance	$fill in the blank 0b94ddf50004050_11	Favorable Unfavorable

4. Compute the variable overhead spending and efficiency variances.

Spending Variance	$fill in the blank 0b94ddf50004050_13	Favorable Unfavorable
Efficiency Variance	$fill in the blank 0b94ddf50004050_15	Favorable Unfavorable

Question Content Area

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 Payable Direct Labor Efficiency Variance Direct Labor Rate Variance Direct Materials Price Variance Materials	- Select -	- Select -
	Direct Materials Price Variance Direct Materials Usage Variance Fixed Overhead Control Materials Various Accounts	- Select -	- Select -
	Accounts Payable Direct Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Usage VarianceFixed Overhead Control	- Select -	- Select -
b.	Materials Variable Overhead Control Various Accounts Wages Payable Work in Process	- Select -	- Select -
	Direct Materials Price Variance Direct Materials Usage Variance Fixed Overhead ControlMaterialsVarious Accounts	- Select -	- Select -
	Accounts Payable Direct 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 -

Question Content Area

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:

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

Question Content Area

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

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

Question Content Area

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.

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