III.

Wagner Company developed the following standard costs for its product for 2018:

WAGNER COMPANY

Standard Cost Card

Cost Elements	Standard Quantity				Standard Price		=	Standard Cost
Direct materials		4 pounds	$ 5			$20
Direct labor		2 hours	10			20
Variable overhead		2 hours	4			8
Fixed overhead		2 hours	2			4
						$52

The company expected to work at the 40,000 direct labor hours level of activity and produce 20,000 units of product (therefore these are considered normal levels). Total overhead at this level of production is expected to be $80,000 fixed and $160,000 variable.

Actual results for 2018 were as follows:

20,500 units of product were actually produced.

Direct labor costs were $411,600 for 39,200 direct labor hours actually worked.

Actual direct materials purchased (on account) and used during the year cost $394,800 for 84,000 pounds.

Total actual manufacturing overhead costs were $253,300 ($85,300 fixed and $168,000 variable).

Instructions

I. Compute the following variances for Wagner Company for 2018 and indicate whether the variance is favorable or unfavorable.

1.	Direct materials price variance.
2.	Direct materials quantity variance.
3.	Direct labor rate variance.
4.	Direct labor quantity variance.
5.	Overhead controllable variance.
6.	Overhead volume variance.

2. Prepare both entries to record only the materials price and quantity variances.