Haliburton Mills Inc. is a large producer of men's and women's clothing. The company uses standard costs for all of its products. The standard costs and actual costs for a recent period are given below for one of the company's product lines (per unit of product): standard Actual Direct materials: standard: 3.0 metres at $5.60 per metre Actual: 3.2 metres at $5.40 per metre Direct labour: standard: 2.0 hours at $3.50 per hour Actual: 1.8 hours at $3.85 per hour Variable manufacturing overhead: Standard: 2.0 hours at $1.80 per hour Actual: 1.8 hours at $2.10 per hour Fixed manufacturing overhead: Standard: 2.0 hours at $5.00 per hour Actual: 1.8 hours at $5.05 per hour Total cost per unit Cost Cost $16.80 $17.28 7.00 6.93 D 3.60 3.78 10.00 9.09 $37.40 $37.08 Actual costs: 7,000 units at $37.08 Standard costs: 7,000 units at $37.40 Difference in cost-favourable $259,560 261,800 $ 2,240 During this period, the company produced 7,000 units of product. A comparison of standard and actual costs for the period on a total cost basis is also given above. There was no inventory of materials on hand to start the period. During the period. 22.400 metres of materials was purchased and used in production. The denominator level of activity for the period was 12.740 hours. Help Required: 1. For direct materials: a. Compute the price and quantity variances for the period. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Price variance $ Quantity variance $ 4,480 F 7,840 U b. Prepare journal entries to record all activity relating to direct materials for the period. View transaction list View journal entry worksheet b. Prepare journal entries to record all activity relating to direct materials for the period. View transaction list View journal entry worksheet No Event General Journal A 1 Raw materials B 2 Materials price variance Accounts payable Work in process Materials quantity variance Raw materials Debit Credit 125,440 4,480 120,960 117,600 7,840 125,440 a. Compute the rate and efficiency variances. (Indicate the effect of variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (ie., zero variance).) Labour rate variance $ 4,410 U Labour efficiency variance 4,100 F b. Prepare a journal entry to record the incurrence of direct labour cost for the period. (List debit entries first). View transaction list View journal entry worksheet No Event General Journal 1 1 Work in process Labour rate variance Labour efficiency variance Accounts payable Debit Credit 49,000 4,410 4,900 48,510 3. Compute the variable manufacturing overhead spending and efficiency variances. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (.e., zero variance).) Variable overhead spending variance Variable overhead efficiency variance 3,780 U 2,520 F Help Sav 4. Compute the fixed overhead budget and volume variances. (Indicate the effect of variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Fixed overhead budget variance Fixed overhead volume variance 5. On seeing the $2,240 total cost variance, the company's president stated, "It's obvious that our costs are well under control." Do you agree? O Yes O No