Grand Fender is a competitor of Pro Fender from Exercise E23-19. Grand Fender also

uses a standard cost system and provides the following information:

Static budget variable overhead $ 5,630

Static budget fixed overhead $ 22,520

Static budget direct labor hours 563 hours

Static budget number of units 21,000 units

Standard direct labor hours 0.026 hours per fender

Grand Fender allocates manufacturing overhead to production based on standard

direct labor hours. Grand Fender reported the following actual results for 2016: actual

number of fenders produced, 20,000; actual variable overhead, $5,200; actual fixed

overhead, $24,000; actual direct labor hours, 480.

Requirements

1. Compute the overhead variances for the year: variable overhead cost variance,

variable overhead efficiency variance, fixed overhead cost variance, and fixed

overhead volume variance.

2. Explain why the variances are favorable or unfavorable.

[E23-19Pro Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2016, using 146,000 square feet of extruded vinyl purchased at $1.05 per square foot. Production required 410 direct labor hours that cost $15.00 per hour. The direct materials standard was seven square feet of vinyl per fender, at a standard cost of $1.10 per square foot. The labor standard was 0.026 direct labor hour per fender, at a standard cost of $14.00 per hour.]

P23-35 Calculating materials and labor variances and preparing journal entries

This continues the Daniels Consulting situation from the Problem P22-57 of Chapter 22. Assume Daniels has created a standard cost card for each job. Standard direct materials per job include 10 software packages at a cost of $900 per package. Standard direct labor costs per job include 105 hours at $100 per hour. Daniels plans on completing 12 jobs during March 2018.

Actual direct materials costs for March included 90 software packages at a total cost of $81,450. Actual direct labor costs included 110 hours per job at an average rate of $107 per hour. Daniels completed all 12 jobs in March.

Requirements

1. Calculate direct materials cost and efficiency variances.

2. Calculate direct labor cost and efficiency variances.

3. Prepare journal entries to record the use of both materials and labor for March for the company.

P22-57 is attached.