EZ Tees Corporation produces T-shirts. The company uses a standard costing system and has set the following standards for direct materials and direct labor (for one shirt):

Fabric (1.5 yds. @ $2.80)	$4.20
Direct labor (1.1 hr. @ $20)	22.00
Total prime cost	$26.20

During the year, EZ Tees produced 9,600 T-shirts. The actual fabric purchased was 14,300 yards at $2.76 per yard. There were no beginning or ending inventories of fabric. Actual direct labor was 10,680 hours at $19.60 per hour.

Required:

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1. Compute the costs of fabric and direct labor that should have been incurred for the production of 9,600 T-shirts.

Direct materials	$
Direct labor	$

2. Compute the total budget variances for direct materials and direct labor.

Direct materials	$	Favorable or Unfavorable
Direct labor	$	Favorable or Unfavorable

3. Break down the total budget variance for direct materials into a price variance and a usage variance.

Materials Price Variance	$	Favorable or Unfavorable
Materials Usage Variance	$	Favorable or Unfavorable

Question Content Area

Prepare the journal entries associated with these variances. If an amount box does not require an entry, leave it blank.

Price Variance
Usage Variance

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4. Break down the total budget variance for direct labor into a rate variance and an efficiency variance.

Labor Rate Variance	$	Favorable or Unfavorable
Labor Efficiency Variance	$	Favorable or Unfavorable

Question Content Area

Prepare the journal entries associated with these variances. If an amount box does not require an entry, leave it blank.