MISSOURI CORP. .... manufactures widgets. The materials used for the widgets are inexpensive, but the process is very labor intensive. The supervisor decided to use cheaper labor this period to see whether costs could be reduced. You have been asked to prepare a report about how effective operations had been during the month of October. The following standards have been established in connection with the production of one widget (standard costs per unit): Cost per 3 lbs. @ 5 hrs @ $12 per lb. $15 per hr unit $36 $75 Direct materials Direct labor Factory overhead: Variable Fixed $3 per direct labor hr $4 per direct labor hr ($20 per unit)) $15 $20 $146 Overhead (fixed and variable) is applied on the basis of direct labor hours. Estimated production for the month was 8,000 widgets, or 40,000 labor hours. During October, the company actually produced 7,800 widgets and the records showed the following: Direct materials purchased 23,100 lbs @ $12.60 Direct materials used 23,100 lbs @ Direct labor 40,100 hours @ $14.60 Variable overhead $119,000 Fixed overhead $180,000 Note: The quantity purchased was exactly equal to the quantity used. The company's policy is to record direct materials price variances at the time the materials are purchased. REQUIRED: 5. Prepare a simple and meaningful performance report (variance report) for direct materials which explains the flexible budget variance (standard cost variance) above. (A picture would be just fine) 6. For this requirement only - how would your variances and entries be different if, instead of purchasing 23,100 lbs per above, the company purchased 30,000 lbs, but only used 23,100 per above. Re-compute any variances and journal entries from #3 using this assumption. DIRECT LABOR 7. Assume the company uses normal costing. Record the journal entries for direct labor (T-accounts preferred): a) Usage of direct labor b) Payment of direct labor 8. Prepare a simple and meaningful performance report (variance report) for direct materials AND direct labor showing: (A picture would be just fine) d) The total budget variance; e) The flexible budget variance (standard cost variance) The volume variance f)