Question I I) (34 marks)

Becker Co. produces and sells a single product. The standard cost card for the product is stated below:

Standard Cost Card - Per Unit

Direct Materials, 7 Yards at $8.50 per Yard

$59.50

Direct Labour, 2.5 Direct Labour-Hrs. at $21 per Direct Labour-Hr.

$52.50

Variable Overhead, 2.5 Direct Labour-Hrs. at $6 per Direct Lab.-Hr.

$15.00

Fixed Overhead, 2.5 Direct Labour-Hrs. at $6 per Direct Labour-Hr.

$15.00

Standard Cost Per Unit

$142.00

The following additional information is available for the year just completed:

a.- The company manufactured 28,000 units of product during the year.

b.- A total of 194,040 yards of material was purchased during the year at a cost of $8.80 per yard. All of this material was used to manufacture the 28,000 units. There were no beginning or ending inventories for the year.

c.- The company worked 69,200 direct labour-hours during the year at a total cost of $1,453,200.

d.- Overhead cost is applied to products on the basis of direct labour-hours. Data related to manufacturing overhead costs follow:

Denominator Activity Level (Direct Labour-Hours)

72,000

Budgeted Fixed Overhead Costs

$432,000

Actual Fixed Overhead Costs

$435,960

Actual Variable Overhead Costs

$401,360

Required:

1) Compute the direct materials price and usage variances for the year. 2) Compute the direct labour rate and efficiency variances for the year.

3)For manufacturing overhead, compute the following:

a)The variable overhead spending and efficiency variances for the year.

b)The fixed overhead spending and volume variances for the year.

4)Using selected information from the answers above, prepare journal entries for the following (omit dates) isolating variances where appropriate.

a)The purchase of direct materials (assume on account).

b)The issuance of direct materials to production.

c)The incurrence of actual variable manufacturing overhead costs and actual fixed manufacturing overhead costs.