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. @ $1.25)	$10.00
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	$13.64

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

1. Units produced: 53,000
2. Direct materials purchased: 408,000 pounds at $1.32 per pound
3. Direct materials used: 406,900 pounds
4. Direct labor: 10,500 hours at $17.95 per hour
5. Fixed overhead: $36,570
6. Variable overhead: $18,000

Required:

1. Compute price and usage variances for direct materials.

MPV ____________ Unfavorable

MUV _____________ Favorable

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

Labor Rate Variance

Labor Efficiency Variance

3. Compute the fixed overhead spending and volume variances.

Spending Variance

Volume Variance

4. Compute the variable overhead spending and efficiency variances.

Spending Variance

Efficiency Variance