DM & DL variances; journal entries

Schmidt Co. has the following standard material and labor quantities and costs for one unit of Product SWK#468:

Material	1.80 pounds @ $3.30 per pound
Labor	0.04 hour @ $14.00 per hour

During July, the purchasing agent found a "good deal" on the raw material needed for Product SWK#468 and bought 100,900 pounds of material at $2.90 per pound. In July, the company produced 50,000 units of Product SWK#468 with the following material and labor usage:

Material	96,100 pounds
Labor	2,260 hours @ $14.20 (due to a renegotiated labor contract)

b. Calculate the material and labor variances for July.

Material Price Variance	$	- ______ -Favorable or Unfavorable
Material Quantity Variance	$	- ______ -Favorable or Unfavorable
Total Labor Variance	$	- ______ -Favorable or Unfavorable

c. Prepare the material and labor journal entries for July. For compound entries, if an amount box does not require an entry, leave it blank or enter "0". Round your final answers to the nearest dollar.

d. Did the purchasing agent make a "good deal" on the raw material? Explain.

This is how you do part b.,

b. Material price variance = (AP x AQp) - (SP x AQp). Material quantity variance = (SP x AQu) - (SP x SQ). Labor Rate Variance = (AP x AQ) - (SP x AQ). Labor Efficiency Variance = (SP x AQ) - (SP x SQ). Total Labor Variance = (AP x AQ) - (SP x SQ).

Part c is just the journal entries.

If it helps for part B.

Material Price Variance is favorable Material Quantity Variance is unfavorable Total Labor Variance is unfavorable

Material Price Variance Material Qty. Variance l abor Variances