problem 9.30

Direct Materials, Direct Labor, and Overhead Variances, Journal Entries Algers Company produces dry fertilizer. At the beginning of the year, Algers had the following standard cost sheet: Direct materials (5 lbs. @ $2.60) $13.00 Direct lobor (0.75 hr.@ 818 .00) 13.50 Fixed overhead (0.75 hr. @$4.00) 3.00 Variable overhead (0.75 hr. @$3.00) 2.25 Standard cost per unit $31.75 Algers computes its overhead rates using practical volume, which is 54.000 units. The actual results for the year are as follows: Units produced: 53.000 Direct materials purchased: 274.000 pounds at $2.50 per pound Direct materials used 270.300 pounds Direct labor: 40.100 hours at $17.95 per hour Fixed overhead: $161.700 Variable overhead: $122,000 Required: Compute price and usage variances for direct materials. Compute the direct labor rate and labor efficiency variances. Compute (he fixed overhead spending and volume variances. Interpret the volume variance. Compute the variable overhead spending and efficiency variances. Prepare journal entries for the following: The purchase of direct materials The issuance of direct materials to production (Work in Process) The addition of direct labor to Work in Process The addition of overhead to Work in Process The incurrence of actual overhead costs Closing out of variances to Cost of Goods Sold Solving for Unknowns Misterio Company uses a standard costing system. During the past quarter, the following variances were computed: Variable overhead efficiency variance $ 24,000 U Direct labor efficiency variance 120,000 U Direct labor rate variance 10, 400 U