Exercise 10B-2 Materials and Labour Variances; Journal Entries [LO2, LO3, LO9] Marmot Products began production of a new product on April 1. The company uses a standard costing system and has established the following standards for one unit of the new product: Direct materials Direct labour Standard Quantity or Hours 3.5 metres. 0.4 hours Standard Price or Rate Standard Cost $ 6 per metre $10 per hour $21 $4 S During April, the following activity was recorded regarding the new product: a. Purchased 7,000 metres of materials at a cost of $5.75 per metre. b. Used 6,000 metres of materials to produce 1,500 units of the new product. c. Worked 725 direct labour-hours on the new product at a cost of $8,120. Required: 1. For direct materials: a. Compute the direct materials price and quantity variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Materials price variance Materials quantity variance Chec k ces b. Prepare journal entries to record the purchase of materials and the use of materials in production. View transaction list Journal entry worksheet 1 2 Record the purchase of materials. Note: Enter debits before credits. Event 1 General Journal Debit Credit A Record entry Clear entry View general journal 2. For direct labour: a. Compute the direct labour rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (l.e., zero varlance).) Labour rate variance Labour efficiency variance b. Prepare journal entries to record the incurrence of direct labour cost for the month. View transaction list Journal entry worksheet 1 Record the Incurrence of direct labour cost for the month. Note: Enter debits before credits. Event 1 General Journal Debit Credit View general journal Record entry Clear entry 3. Post the entries you have prepared to the T-accounts below: Raw Materials Beg. bal End. bal Accounts Payable Beg. bal End. bal Materials Price Variance Wages Payable Beg. bal Beg. bal es End. bal End. bal Materials Quantity Variance Labour Rate Variance Beg. bal Beg. bal End. bal End. bal Work in Process Labour Efficiency Variance Beg. bal Beg. bal End. bal End. bal