problem 9.31

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 the 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 Misterio applies variable overhead using a standard rate of S2 per direct labor hour allowed Two direct labor hours are allowed per unit produced. (Only one type of product is manufactured. During the quarter, Misterio used 30 percent more direct labor hours than should have been used. Required: What were the actual direct labor hours worked-? The total hours allowed? What is the standard hourly rate for direct labor? The actual hourly rate? How many actual units were produced? Basic Variance Analysis. Revision of Standards, Journal Entries Petrillo Company produces engine parts for large motors. The company uses a standard c system for production costing and control. The standard cost sheet for one of its higher volume products (a valve) is as follows