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Sven Enterprises is a large producer of gourmet pet food. During April, it produced 147 batches of puppy meal. Each batch weighs 1,000 pounds. To produce this quantity of output, the company purchased and used 148,450 pounds of direct material at a cost of $593,800. It also incurred direct labor costs of $17,600 for the 2,200 hours worked by employees on the puppy meal crew. Manufacturing overhead incurred at the puppy meal plant during April totaled $3,625, of which $2,450 was considered fixed. Sven's standard cost information for 1,000-pound batches of puppy meal is as follows: Direct materials standard price Standard quantity allowed per batch Direct labor standard rate Standard hours allowed per batch Fixed overhead budgeted Normal level of production Variable overhead application rate Fixed overhead application rate ($2,800 140 batches) $4.20 per pound 1,020 pounds $8.50 per hour 14 direct labor hours $2,800 per month 140 batches per month $ 9.00 per batch 20.00 per batch Total overhead application rate $29.00 per batch Instructions a. Compute the materials price and quantity variances. b. Compute the labor rate and efficiency variances. c. Compute the manufacturing overhead spending and volume variances. d. Record the journal entry to charge materials (at standard) to Work in Process. e. Record the journal entry to charge direct labor (at standard) to Work in Process. f. Record the journal entry to charge manufacturing overhead (at standard) to Work in Process. g. Record the journal entry to transfer the 147 batches of puppy meal produced in April to Finished Goods. h. Record the journal entry to close any over- or underapplied overhead to Cost of Goods Sold. (Omit the "$" sign in your response. Round your answers to two decimal places. Include .00 if there are no cents.) a. Materials Price Variance = = = *Actual Price per Pound = $/ pounds = /pound Materials Quantity Variance Actual Quantity Used (Standard Price Actual Price) pounds ($ $*) $ Favorable Standard Price (Standard Quantity Actual Quantity) $ per pound (149,940 = pounds* pounds) = $ Favorable *Standard Quantity Allowed = 147 batches 1,020 pounds/batch = 149,940 pounds Actual Labor Hours b. Labor Rate Variance = (Standard Rate Actual Rate) = hours ($ $*) = $ Favorable *Actual Rate per Hour = $/ hours = $8.00/hour Standard Hourly Rate Labor Efficiency Variance = (Standard Hours Actual Hours) $ per hour ( hours* = hours) = -$1,207 (or $1,207 Unfavorable) = *Standard Hours Allowed = batches hours/batch = hours c. Overhead variances: Actual Standard Overhead Overhead Overhead Costs Costs Costs Applied Incurred Allowed Fixed $ Fixed $ $/batch batches = $ Variable Variable 1,323* $ $ $ Favorable Spending Variance $ Favorable Volume Variance *Standard Variable Overhead Allowed = $9.00/batch 147 batches = $1,323 Entry to charge materials to d. production: Work in Process Inventory (at standard cost) Materials Quantity Variance (favorable) Materials Price Variance (favorable) Direct Materials Inventory (at actual cost) To record the cost of direct materials charged to production. e. Entry to charge direct labor to production: Work in Process Inventory (at standard cost) Labor Efficiency Variance (unfavorable) Labor Rate Variance (favorable) Direct Labor (at actual cost) To record the cost of direct labor charged to production. f. Entry to charge overhead to production: Work in Process Inventory (at standard cost) Overhead Spending Variance (favorable) Overhead Volume Variance (favorable) Manufacturing Overhead (at actual cost) To apply overhead to production. g Entry to transfer the 147 batches of puppy meal produced in April to finished goods: . Finished Goods Inventory (at standard cost) Work in Process * Inventory (at standard cost) To transfer 147 batches of puppy meal to finished goods in April. *The $ figure equals the total direct materials, direct labor, and manufacturing overhead charged to production at standard cost during April ($629,748 + $ + $). h Entry to close overapplied overhead to cost of goods sold: . Overhead Spending Variance (favorable) Overhead Volume Variance (favorable) Cost of Goods Sold To close overhead variances to Cost of Goods Sold
