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

Direct materials (5 lbs. @ $2.60)	$13.00
Direct labor (0.75 hr. @ $18.00)	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

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 @ $2.50 per pound

Direct materials used: 270,300 pounds

Direct labor: 40,100 hours at $17.95 per hour

Fixed overhead: $161,600

Variable overhead: $122,000

Required:

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1. Compute price and usage variances for direct materials.

MPV	$fill in the blank 107b790a7ffefa3_1	FavorableUnfavorable
MUV	$fill in the blank 107b790a7ffefa3_3	FavorableUnfavorable

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

Labor Rate Variance	$fill in the blank 107b790a7ffefa3_5	FavorableUnfavorable
Labor Efficiency Variance	$fill in the blank 107b790a7ffefa3_7	FavorableUnfavorable

3. Compute the fixed overhead spending and volume variances.

Spending Variance	$fill in the blank 107b790a7ffefa3_9	FavorableUnfavorable
Volume Variance	$fill in the blank 107b790a7ffefa3_11	FavorableUnfavorable

4. Compute the variable overhead spending and efficiency variances.

Spending Variance	$fill in the blank 107b790a7ffefa3_13	FavorableUnfavorable
Efficiency Variance	$fill in the blank 107b790a7ffefa3_15	FavorableUnfavorable

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5. 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

If an amount box does not require an entry, leave it blank.

a.	Accounts PayableDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price VarianceMaterialsMaterials	Materials	Materials
	Direct Materials Price VarianceDirect Materials Usage VarianceFixed Overhead ControlMaterialsVarious AccountsDirect Materials Price Variance	Direct Materials Price Variance	Direct Materials Price Variance
	Accounts PayableDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Usage VarianceFixed Overhead ControlAccounts Payable	Accounts Payable	Accounts Payable
b.	MaterialsVariable Overhead ControlVarious AccountsWages PayableWork in ProcessWork in Process	Work in Process	Work in Process
	Direct Materials Price VarianceDirect Materials Usage VarianceFixed Overhead ControlMaterialsVarious AccountsDirect Materials Usage Variance	Direct Materials Usage Variance	Direct Materials Usage Variance
	Accounts PayableDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price VarianceMaterialsMaterials	Materials	Materials
c.	MaterialsVariable Overhead ControlVarious AccountsWages PayableWork in ProcessWork in Process	Work in Process	Work in Process
	Direct Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage VarianceFixed Overhead ControlDirect Labor Efficiency Variance	Direct Labor Efficiency Variance	Direct Labor Efficiency Variance
	Direct Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage VarianceFixed Overhead ControlMaterialsDirect Labor Rate Variance	Direct Labor Rate Variance	Direct Labor Rate Variance
	Fixed Overhead ControlMaterialsVariable Overhead ControlVarious AccountsWages PayableWages Payable	Wages Payable	Wages Payable
d.	Accounts PayableDirect Labor Efficiency VarianceDirect Labor Rate VarianceWages PayableWork in ProcessWork in Process	Work in Process	Work in Process
	Direct Materials Price VarianceDirect Materials Usage VarianceMaterialsVarious AccountsVariable Overhead ControlVariable Overhead Control	Variable Overhead Control	Variable Overhead Control
	Fixed Overhead ControlMaterialsVarious AccountsWages PayableWork in ProcessFixed Overhead Control	Fixed Overhead Control	Fixed Overhead Control
e.	MaterialsVariable Overhead ControlVarious AccountsWages PayableWork in ProcessVariable Overhead Control	Variable Overhead Control	Variable Overhead Control
	Fixed Overhead ControlMaterialsVarious AccountsWages PayableWork in ProcessFixed Overhead Control	Fixed Overhead Control	Fixed Overhead Control
	Accounts PayableDirect Labor Efficiency VarianceDirect Labor Rate VarianceMaterialsVarious AccountsVarious Accounts	Various Accounts	Various Accounts

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f. Prepare journal entries for the closing out of variances to Cost of Goods Sold. If an amount box does not require an entry, leave it blank.

First, close direct materials and direct labor variances:

blank	Cost of Goods SoldDirect Labor Efficiency VarianceDirect Materials Price VarianceDirect Materials Usage VarianceCost of Goods Sold	Cost of Goods Sold	Cost of Goods Sold
	Cost of Goods SoldDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Usage VarianceDirect Materials Usage Variance	Direct Materials Usage Variance	Direct Materials Usage Variance
	Direct Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage VarianceVariable Overhead ControlVariable Overhead Spending VarianceDirect Labor Rate Variance	Direct Labor Rate Variance	Direct Labor Rate Variance
	Direct Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price VarianceVariable Overhead ControlVariable Overhead Spending VarianceDirect Labor Efficiency Variance	Direct Labor Efficiency Variance	Direct Labor Efficiency Variance
	Cost of Goods SoldDirect Labor Rate VarianceDirect Materials Price VarianceVariable Overhead ControlVariable Overhead Spending VarianceDirect Materials Price Variance	Direct Materials Price Variance	Direct Materials Price Variance

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Second, recognize the overhead variances:

blank	Cost of Goods SoldFixed Overhead ControlFixed Overhead Volume VarianceVariable Overhead ControlWork in ProcessVariable Overhead Control	Variable Overhead Control	Variable Overhead Control
	Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Spending VarianceWork in ProcessVariable Overhead Spending Variance	Variable Overhead Spending Variance	Variable Overhead Spending Variance
	Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Efficiency VarianceWork in ProcessFixed Overhead Control	Fixed Overhead Control	Fixed Overhead Control
	Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending VarianceFixed Overhead Volume Variance	Fixed Overhead Volume Variance	Fixed Overhead Volume Variance
	Cost of Goods SoldFixed Overhead ControlFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending VarianceVariable Overhead Efficiency Variance	Variable Overhead Efficiency Variance	Variable Overhead Efficiency Variance
	Cost of Goods SoldFixed Overhead Volume VarianceVariable Overhead ControlVariable Overhead Efficiency VarianceVariable Overhead Spending VarianceVariable Overhead Spending Variance	Variable Overhead Spending Variance	Variable Overhead Spending Variance

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Third, close the overhead variances: Note: Close the variances with a debit balance first.

blank	Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending VarianceFixed Overhead Volume Variance	Fixed Overhead Volume Variance	Fixed Overhead Volume Variance
	Cost of Goods SoldFixed Overhead ControlFixed Overhead Volume VarianceVariable Overhead ControlWork in ProcessWork in Process	Work in Process	Work in Process
	Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Spending VarianceWork in ProcessVariable Overhead Spending Variance	Variable Overhead Spending Variance	Variable Overhead Spending Variance
	Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Efficiency VarianceWork in ProcessVariable Overhead Efficiency Variance	Variable Overhead Efficiency Variance	Variable Overhead Efficiency Variance
blank	Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending VarianceCost of Goods Sold	Cost of Goods Sold
	Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending VarianceFixed Overhead Spending Variance		Fixed Overhead Spending Variance