Rand Company produces dry fertilizer. At the beginning of the year, Rand had the following standard cost sheet:

Direct materials $(5$ lbs$.$ @ $$2\mathrm{.}60)$ $$13\mathrm{.}00$

Direct labor $(0\mathrm{.}75$ hr$.$ @ $$18\mathrm{.}00)13\mathrm{.}50$

Fixed overhead $(0\mathrm{.}75$ hr$.$ @ $$4\mathrm{.}00)3\mathrm{.}00$

Variable overhead $(0\mathrm{.}75$ hr$.$ @ $$3\mathrm{.}00)2\mathrm{.}25$

Standard cost per unit $$31\mathrm{.}75$

Overhead rates are computed using practical volume, which is $54,000$ units. The actual results for the year are as follows:

Units produced: $53,000$

Direct materials purchased: $265,000$ pounds @ $$2\mathrm{.}50$ per pound

Direct materials used: $270,200$ pounds

Direct labor: $40,100$ hours at $$17\mathrm{.}95$ per hour

Fixed overhead: $$161,700$

Variable overhead: $$122,000$

Required:

Question Content Area

$1.$ Compute price and usage variances for direct materials.

MPV $$26,500$ Favorable

MUV $$13,520$ Unfavorable

$2.$ Compute the direct labor rate and labor efficiency variances.

Labor Rate Variance $$2,005$ Favorable

Labor Efficiency Variance $$6,300$ Unfavorable

$3.$ Compute the fixed overhead spending and volume variances.

Spending Variance $$300$ Favorable

Volume Variance $$3,000$ Unfavorable

$4.$ Compute the variable overhead spending and efficiency variances.

Spending Variance $$1,700$ Unfavorable

Efficiency Variance $$1,050$ Unfavorable

Question Content Area

$5.$ Prepare journal entries for the following:

$($a$.)$ The purchase of direct materials

$($b$.)$ The issuance of direct materials to production $($Work in Process$)$

$($c$.)$ The addition of direct labor to Work in Process

$($d$.)$ The addition of overhead to Work in Process

$($e$.)$ The incurrence of actual overhead costs