Drasher, Inc. is a privately held furniture manufacturer. For August 2017 Drasher had the following standards for one of its products, a wicker chair: (Click the icon to view the standards.) (Click the icon to view the costs and variances for actual production "option 1.) (Click the icon to view the costs and variances under the assumptions "option2") Requirement Prepare journal entries and post them to T-accounts for the price and officiency variances listed under the two options. Summarize how these journal entries differ from normal-costing entries. Standards per chair 3 square yards of input at $5.50 per square yard 0.5 hour of input at $10.70 per hour Direct materials Direct manufacturing labor For August 2017, Drasher had the following costs and variances for actual production of 2,100 chairs, 5,900 square yards of input purchased and used: Option 1: Actual production Actual input Flexible Actual costs Budgeted price budget costs $ 33,040 $ 32,450 $ 34,650 Direct materials Direct manufacturing labor 10,791 10,593 11,235 Price Efficiency variances variances Direct materials $ 590 U $ 2,200 F Direct manufacturing labor 198 U 642 F The following variances are under the assumption that 8,400 square yards of materials were purchased, even though only 5,900 square yards were used. Suppose further that direct materials price variances are isolated and traced at the time of purchase to the purchasing department rather than to the production department. X Option 2: Increase in purchases Actual input Flexible Direct materials: Actual costs Budgeted price budget costs 47,040 $ 46,200 Purchasing $ 32,450 $ 34,650 Production Price Efficiency variance variance $ 840 U $ 2,200 F Direct materials Drasher, Inc. is a privately held furniture manufacturer. For August 2017 Drasher had the following standards for one of its products, a wicker chair: (Click the icon to view the standards.) (Click the icon to view the costs and variances for actual production "option 1.) (Click the icon to view the costs and variances under the assumptions "option2") Requirement Prepare journal entries and post them to T-accounts for the price and officiency variances listed under the two options. Summarize how these journal entries differ from normal-costing entries. Standards per chair 3 square yards of input at $5.50 per square yard 0.5 hour of input at $10.70 per hour Direct materials Direct manufacturing labor For August 2017, Drasher had the following costs and variances for actual production of 2,100 chairs, 5,900 square yards of input purchased and used: Option 1: Actual production Actual input Flexible Actual costs Budgeted price budget costs $ 33,040 $ 32,450 $ 34,650 Direct materials Direct manufacturing labor 10,791 10,593 11,235 Price Efficiency variances variances Direct materials $ 590 U $ 2,200 F Direct manufacturing labor 198 U 642 F The following variances are under the assumption that 8,400 square yards of materials were purchased, even though only 5,900 square yards were used. Suppose further that direct materials price variances are isolated and traced at the time of purchase to the purchasing department rather than to the production department. X Option 2: Increase in purchases Actual input Flexible Direct materials: Actual costs Budgeted price budget costs 47,040 $ 46,200 Purchasing $ 32,450 $ 34,650 Production Price Efficiency variance variance $ 840 U $ 2,200 F Direct materials
