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f. Prepare journal entries for the closing out of variances to Cost of Goods Sold. Post amounts from highest to lowest. If an amount box
f. Prepare journal entries for the closing out of variances to Cost of Goods Sold. Post amounts from highest to lowest. If an amount box does not require an entry, leave it blank. First, close direct materials and direct labor variances: Cost of Goods Sold 52,560 X Direct Materials Usage Variance 21,375 X X Direct Labor Rate Variance 525 Direct Labor Efficiency Variance 28,560 X Direct Materials Price Variance 45,900 X Second, recognize the overhead variances: Post amounts from highest to lowest. If an amount box does not require an entry, leave it blank. Variable Overhead Control 7,170 X Fixed Overhead Spending Variance 150 Fixed Overhead Control 4,335 X Fixed Overhead Volume Variance 2,400X Variable Overhead Efficiency Variance 4,770 X Variable Overhead Spending Variance 4,485 x Third, close the overhead variances: Post amounts from highest to lowest. If an amount box does not require an entry, leave it blank. Fixed Overhead Volume Variance 2,400 X Variable Overhead Efficiency Variance 4,335 X Variable Overhead Spending Variance 150 x Cost of Goods Sold 9,255 X Fixed Overhead Spending Variance 7,170 X Direct Materials, Direct Labor, and Overhead Variances, Journal Entries Rand Company produces dry fertilizer. At the beginning of the year, Rand had the following standard cost sheet: Direct materials (8 lbs. @ $1.25) $10.00 Direct labor (0.15 hr. @ $18.00) 2.70 Fixed overhead (0.20 hr. @ $3.00) 0.60 Variable overhead (0.20 hr. @ $1.70) 0.34 Standard cost per unit $13.64 Overhead rates are computed using practical volume, which is 49,000 units. The actual results for the year are as follows: a. Units produced: 53,000 b. Direct materials purchased: 408,000 pounds at $1.32 per pound c. Direct materials used: 406,800 pounds d. Direct labor: 10,500 hours at $17.95 per hour e. Fixed overhead: $36,570 f. Variable overhead: $18,000 Required: 1. Compute price and usage variances for direct materials. MPV $ 28,560 Unfavorable MUV $ 21,500 Favorable 2. Compute the direct labor rate and labor efficiency variances. Labor Rate Variance $ 525 Favorable Labor Efficiency Variance 45,900 Unfavorable 3. Compute the fixed overhead spending and volume variances. Spending Variance $ 7,170 Unfavorable Volume Variance 2,400 Favorable 4. Compute the variable overhead spending and efficiency variances. Spending Variance $ 150 Unfavorable Efficiency Variance 4,335 Unfavorable 5. Prepare journal entries for the following: a. The purchase of direct materials b. The issuance of direct materials to production (Work in Process) c. The addition of direct labor to Work in Process d. The addition of overhead to Work in Process e. The incurrence of actual overhead costs If an amount box does not require an entry, leave it blank. a. Materials 510,000 Direct Materials Price Variance 28,560 Accounts Payable 538,560 530,000 X b. Work in Process Direct Materials Usage Variance Materials 21,375 508,625 X c. Work in Process 143,100 45,900 Direct Labor Efficiency Variance Direct Labor Rate Variance 525 Wages Payable 188,475 d. Work in Process 45,315 Variable Overhead Control 13,515 If an amount box does not require an entry, leave it blank. a. Materials 510,000 28,560 Direct Materials Price Variance Accounts Payable 538,560 530,000 b. Work in Process Direct Materials Usage Variance Materials 21,375 508,625 c. Work in Process 143,100 45,900 Direct Labor Efficiency Variance Direct Labor Rate Variance Wages Payable 525 188,475 45,315 d. Work in Process Variable Overhead Control Fixed Overhead Control 13,515 31,800 e. Variable Overhead Control 18,000 Fixed Overhead Control 36,570 Various Accounts 54,570 f. Prepare journal entries for the closing out of variances to Cost of Goods Sold. Post amounts from highest to lowest. If an amount box does not require an entry, leave it blank. First, close direct materials and direct labor variances: Cost of Goods Sold 52,560 X Direct Materials Usage Variance 21,375 X X Direct Labor Rate Variance 525 Direct Labor Efficiency Variance 28,560 X Direct Materials Price Variance 45,900 X Second, recognize the overhead variances: Post amounts from highest to lowest. If an amount box does not require an entry, leave it blank. Variable Overhead Control 7,170 X Fixed Overhead Spending Variance 150 Fixed Overhead Control 4,335 X Fixed Overhead Volume Variance 2,400X Variable Overhead Efficiency Variance 4,770 X Variable Overhead Spending Variance 4,485 x Third, close the overhead variances: Post amounts from highest to lowest. If an amount box does not require an entry, leave it blank. Fixed Overhead Volume Variance 2,400 X Variable Overhead Efficiency Variance 4,335 X Variable Overhead Spending Variance 150 x Cost of Goods Sold 9,255 X Fixed Overhead Spending Variance 7,170 X Direct Materials, Direct Labor, and Overhead Variances, Journal Entries Rand Company produces dry fertilizer. At the beginning of the year, Rand had the following standard cost sheet: Direct materials (8 lbs. @ $1.25) $10.00 Direct labor (0.15 hr. @ $18.00) 2.70 Fixed overhead (0.20 hr. @ $3.00) 0.60 Variable overhead (0.20 hr. @ $1.70) 0.34 Standard cost per unit $13.64 Overhead rates are computed using practical volume, which is 49,000 units. The actual results for the year are as follows: a. Units produced: 53,000 b. Direct materials purchased: 408,000 pounds at $1.32 per pound c. Direct materials used: 406,800 pounds d. Direct labor: 10,500 hours at $17.95 per hour e. Fixed overhead: $36,570 f. Variable overhead: $18,000 Required: 1. Compute price and usage variances for direct materials. MPV $ 28,560 Unfavorable MUV $ 21,500 Favorable 2. Compute the direct labor rate and labor efficiency variances. Labor Rate Variance $ 525 Favorable Labor Efficiency Variance 45,900 Unfavorable 3. Compute the fixed overhead spending and volume variances. Spending Variance $ 7,170 Unfavorable Volume Variance 2,400 Favorable 4. Compute the variable overhead spending and efficiency variances. Spending Variance $ 150 Unfavorable Efficiency Variance 4,335 Unfavorable 5. Prepare journal entries for the following: a. The purchase of direct materials b. The issuance of direct materials to production (Work in Process) c. The addition of direct labor to Work in Process d. The addition of overhead to Work in Process e. The incurrence of actual overhead costs If an amount box does not require an entry, leave it blank. a. Materials 510,000 Direct Materials Price Variance 28,560 Accounts Payable 538,560 530,000 X b. Work in Process Direct Materials Usage Variance Materials 21,375 508,625 X c. Work in Process 143,100 45,900 Direct Labor Efficiency Variance Direct Labor Rate Variance 525 Wages Payable 188,475 d. Work in Process 45,315 Variable Overhead Control 13,515 If an amount box does not require an entry, leave it blank. a. Materials 510,000 28,560 Direct Materials Price Variance Accounts Payable 538,560 530,000 b. Work in Process Direct Materials Usage Variance Materials 21,375 508,625 c. Work in Process 143,100 45,900 Direct Labor Efficiency Variance Direct Labor Rate Variance Wages Payable 525 188,475 45,315 d. Work in Process Variable Overhead Control Fixed Overhead Control 13,515 31,800 e. Variable Overhead Control 18,000 Fixed Overhead Control 36,570 Various Accounts 54,570
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