Next Question (Click the ico and variances under the assumptions "option 2".) Diva, Inc. is a privately held furniture manufacturer. For August 2020, Diva had the following standards for one of its products, a wicker chair: E: (Click the icon to view the standards.) 2 (Click the icon to view the costs and variances for actual production "option 1".) Requirement Prepare journal entries and post them to T-accounts for the price and efficiency variances listed under the two options. Summarize how these journal entries differ from normal-costing entries. Standard Costs and Usage Standards per Chair Direct materials 2 square yards of input at $5.30 per square yard Direct manufacturing labor 0.5 hour of input at $10.40 per hour Option 2 The following variances are under the assumption that 6,200 square yards of materials were purchased, even though only 3,700 square yards were used. Suppose further that direct materials price variances are isolated and traced at the time of purchase to the purchasing department rather than to the production department Option 2: Increase in purchases Actual input Flexible Direct materials: Actual costs Budgeted price budget costs Purchasing $ 34,100 $ 32,860 Production 19,610 $ 21,200 Price Efficiency variance variance Direct materials $ 1,240 U $ 1,590 F $ Option 2. Prepare the journal entry for the direct materials price variance. (Record debits first, then credits. Exclude explanations from any journal entries. Journal Entry Date Accounts Debit Credit 2. (a) Direct Materials Control 51,520 Direct Materials Price Variance 1,840 Accounts Payable Control 53,360 Credit Now prepare the journal entry for direct materials efficiency variance. Journal Entry Date Accounts Work-in-Process Control Direct Materials Efficiency Variance Direct Materials Control Debit 40,320 2. (b) 2,240 38,080 Post option 2's journal entries to the following T-accounts. (Abbreviation used: Mfg.=Manufacturing) Direct Materials Control Direct Materials Price Variance Direct Materials Efficiency Variance 2. (a) 51,520 2. (b)' 38,080 2. (a)' 1,840 2. (b)' 2,240 Direct Mfg. Labor Price Variance Direct Mfg. Labor Efficiency Variance Work-in-Process Control 40,320 2. (b) Wages Payable Control Accounts Payable Control 2. (a)' 53,360 Select the statement(s) that tell how these journal entries differ from normal-costing entries. (Select all that apply.) Direct Materials Control is carried at standard unit prices rather than actual unit prices. Variances appear for direct materials and direct manufacturing labor under standard costing but not under normal costing. Work-in-Process Control is no longer carried at "actual" costs. None of the above
