Exercise 10B-2 Direct Materials and Direct Labor Variances; Journal Entries [LO10-1, LO10-2, LO10-5] Genola Fashions began production of a new product on June 1. The company uses a standard cost system and has established the following standards for one unit of the new product: Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 5.0 yards $6.80 per yard $34.00 Direct labor 0.3 hours $10.60 per hour $3.18 During June, the following activity was recorded for the new product: a. Purchasing acquired 8,200 yards of material at a cost of $6.55 per yard. b. Production used 7,200 yards of the material to manufacture 1,350 units of the new product. c. Production reported that 935 direct labor-hours were worked on the new product at a cost of $10,472. Required: 1. For direct materials: a. Compute the materials price and quantity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) b. Prepare journal entries to record the purchase of materials and the use of materials in production. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 2. For direct labor: a. Compute the labor rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) b. Prepare a journal entry to record the incurrence of direct labor cost for the month. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 3. Post the entries you have prepared to the following T-accounts: RAW MATERIALS, WORK IN PROCESS, ACCOUNTS PAYABLE, WAGES PAYABLE, MATERIALS PRICE VARIANCE, MATERIALS QUANTITY VARIANCE, LABOR PRICE VARIANCE, LABOR EFFICIENCY VARIANCE