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: $13.00 13.50 Direct matenals (5 lbs. @ $2.60) Direct labor (0.75 hr. @ $18.00) Fixed overhead (0.75 hr. @ $4.00) Variable overhead (0.75 hr @ $3.00) 3.00 2.25 Standard cost per unit $31.75 Overhead rates are computed using practical volume, which is 54,000 units. The actual results for the year are as follows: a. Units produced: 53,000 b. Direct materials purchased: 265,000 pounds @ $2.50 per pound c. Direct materials used: 270,200 pounds d. Direct labor: 40,100 hours at $17.95 per hour e. Fixed overhead: $161,800 f. Variable overhead: $122,100 Required: 1. Compute price and usage variances for direct materials. MPV 26,500 Favorable MUV 13,520 Unfavorable 2. Compute the direct labor rate and labor efficiency variances. f. Variable overhead: $122,100 Required: 1. Compute price and usage vanances for direct materials. MPV $ 26,500 Favorable MUV $ 13,520 Unfavorable 2. Compute the direct labor rate and labor efficiency variances. Labor Rate Variance 2,005 Favorable Labor Efficiency Variance 6,300 Unfavorable 3. Compute the fixed overhead spending and volume variances. Spending Variance 200 Favorable Volume Variance 3,000 Unfavorable X 4. Compute the variable overhead spending and efficiency variances. Spending Variance 1,800.49 X Efficiency Variance Feedback Check My Work 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. lll 100 110 111 1110 C. d. heck My Work unprogress=false * eBook 111 III II II III III Feedback Check My Work 5. a. Material purchases are accounted for by debiting Materials and crediting Accounts Payable. Direct Materials Price Variance is debited or credited. b. Direct materials are applied to production by debiting Work in Process and crediting Materals. Direct Materials Usage Varance is debited or credited. c. Direct labor is applied to work in Process by debiting that account and crediting Wages Payable. Direct Labor Efficiency Variance and Direct Labor Rate Varian credited d. OH is applied to production by debiting Work in Process and crediting the variable and fixed OH Control accounts. e. The actual OH is accumulated on the debit side of the OH control accounts L Prepare journal entries for the closing out of variances to cost of Goods Sold. If an amount box does not require an entry, leave it blank. t. Prepare journal entries for the closing out of variances to cost of Goods Sald. If an amount box does not require an entry, leave it blank. First, dose direct materials and direct labor variances: 110 110 Feedback Check My Work 5. f The OH variances are disposed of by dosing them to Cost of Goods sold they are not material or by prorating them among Work in Process, Finished Goode Goods Sold if they are material Second, recognize the overhead variances Second, recognize the overhead variances: il Feedback Check My Work Incorrect Third, close the overhead variances: Note: Close the variances with a debit balance first. Check My Work Second, recognize the overhead variances: il llllll Feedback Check My Work Incorrect Third, close the overhead variances: Note: Close the variances with a debit balance first. Check My Work Feedback Check My Work Incorrect Third, close the overhead variances: Note: Close the variances with a debit balance first. 10 llll Feedback Check My Work Incorrect 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: $13.00 13.50 Direct matenals (5 lbs. @ $2.60) Direct labor (0.75 hr. @ $18.00) Fixed overhead (0.75 hr. @ $4.00) Variable overhead (0.75 hr @ $3.00) 3.00 2.25 Standard cost per unit $31.75 Overhead rates are computed using practical volume, which is 54,000 units. The actual results for the year are as follows: a. Units produced: 53,000 b. Direct materials purchased: 265,000 pounds @ $2.50 per pound c. Direct materials used: 270,200 pounds d. Direct labor: 40,100 hours at $17.95 per hour e. Fixed overhead: $161,800 f. Variable overhead: $122,100 Required: 1. Compute price and usage variances for direct materials. MPV 26,500 Favorable MUV 13,520 Unfavorable 2. Compute the direct labor rate and labor efficiency variances. f. Variable overhead: $122,100 Required: 1. Compute price and usage vanances for direct materials. MPV $ 26,500 Favorable MUV $ 13,520 Unfavorable 2. Compute the direct labor rate and labor efficiency variances. Labor Rate Variance 2,005 Favorable Labor Efficiency Variance 6,300 Unfavorable 3. Compute the fixed overhead spending and volume variances. Spending Variance 200 Favorable Volume Variance 3,000 Unfavorable X 4. Compute the variable overhead spending and efficiency variances. Spending Variance 1,800.49 X Efficiency Variance Feedback Check My Work 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. lll 100 110 111 1110 C. d. heck My Work unprogress=false * eBook 111 III II II III III Feedback Check My Work 5. a. Material purchases are accounted for by debiting Materials and crediting Accounts Payable. Direct Materials Price Variance is debited or credited. b. Direct materials are applied to production by debiting Work in Process and crediting Materals. Direct Materials Usage Varance is debited or credited. c. Direct labor is applied to work in Process by debiting that account and crediting Wages Payable. Direct Labor Efficiency Variance and Direct Labor Rate Varian credited d. OH is applied to production by debiting Work in Process and crediting the variable and fixed OH Control accounts. e. The actual OH is accumulated on the debit side of the OH control accounts L Prepare journal entries for the closing out of variances to cost of Goods Sold. If an amount box does not require an entry, leave it blank. t. Prepare journal entries for the closing out of variances to cost of Goods Sald. If an amount box does not require an entry, leave it blank. First, dose direct materials and direct labor variances: 110 110 Feedback Check My Work 5. f The OH variances are disposed of by dosing them to Cost of Goods sold they are not material or by prorating them among Work in Process, Finished Goode Goods Sold if they are material Second, recognize the overhead variances Second, recognize the overhead variances: il Feedback Check My Work Incorrect Third, close the overhead variances: Note: Close the variances with a debit balance first. Check My Work Second, recognize the overhead variances: il llllll Feedback Check My Work Incorrect Third, close the overhead variances: Note: Close the variances with a debit balance first. Check My Work Feedback Check My Work Incorrect Third, close the overhead variances: Note: Close the variances with a debit balance first. 10 llll Feedback Check My Work Incorrect