Krabs Inc. manufactures a product with the following unit standard costs for material and labor:

Direct materials (7.0 lbs. @ $8.50) $59.50

Direct labor (1.8 hrs. @ $15.00) 27.00

Actual information for the month of October:

Production 72,000 units

Direct materials purchased 460,000 lbs. @ $9.00/lb.

Direct materials used 520,000 lbs.

Direct labor 82,000 hrs. @ $14.00/hr.

Required:

1. Compute the materials price variance and materials usage variance, and be sure to indicate whether each is favorable (F) or unfavorable (U).
2. Indicate who in the company is responsible for each variance.
3. Provide an explanation for each variance, explaining what could cause it to be favorable or unfavorable (based on whether the variance you computed is favorable or unfavorable).

d. Prepare the journal entry to record the purchase of materials

e. Prepare the journal entry to record the issuance of the materials used in production

f. Prepare the journal entry to close the variance accounts.