Required 1 Compute price and usage variances for direct materials MPV $fill in the blank a64132fb3ff7f91 1 FavorableUnfavorableFavorable MUV $fill in the blank a64132fb3ff7f91 3 FavorableUnfavorableUnfavorable 2 Compute the direct labor rate and labor efficiency variances Labor Rate Variance $fill in the blank a64132fb3ff7f91 5 FavorableUnfavorableFavorable Labor Efficiency Variance $fill in the blank a64132fb3ff7f91 7 FavorableUnfavorableUnfavorable 3 Compute the fixed overhead spending and volume variances Spending Variance $fill in the blank a64132fb3ff7f91 9 FavorableUnfavorableFavorable Volume Variance $fill in the blank a64132fb3ff7f91 11 FavorableUnfavorableUnfavorable 4 Compute the variable overhead spending and efficiency variances Spending Variance $fill in the blank a64132fb3ff7f91 13 FavorableUnfavorableUnfavorable Efficiency Variance $fill in the blank a64132fb3ff7f91 15 FavorableUnfavorableUnfavorable Feedback 1 MPV (Materials price variance) (AP SP) x AQ MUV (Materials usage variance) (AQ SQ) x SP 2 LRV (Labor rate variance) (AR SR) x AH LEV (Labor efficiency variance) (AH SH) x SR 3 Fixed OH spending variance AFOH BFOH Volume variance Budgeted fixed OH Applied fixed OH 4 Variable overhead spending variance (Actual variable OH rate (AVOR) (SVOR) Standard variable OH rate) x AH Variable overhead efficiency variance (AH SH) x SVOR 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 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 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 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 $161,600 Variable overhead $122,000 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 Cost of Goods SoldDirect Labor Efficiency VarianceDirect Materials Price VarianceDirect Materials Usage Variance Select Select Cost of Goods SoldDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Usage Variance Select Select Direct Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage VarianceVariable Overhead ControlVariable Overhead Spending Variance Select Select Direct Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price VarianceVariable Overhead ControlVariable Overhead Spending Variance Select Select Cost of Goods SoldDirect Labor Rate VarianceDirect Materials Price VarianceVariable Overhead ControlVariable Overhead Spending Variance Select Select Feedback 5 f The OH variances are disposed of by closing them to Cost of Goods Sold if they are not material or by prorating them among Work in Process, Finished Goods, and Cost of Goods Sold if they are material Second, recognize the overhead variances If an amount box does not require an entry, leave it blank Cost of Goods SoldFixed Overhead ControlFixed Overhead Volume VarianceVariable Overhead ControlWork in Process Select Select Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Spending VarianceWork in Process Select Select Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Efficiency VarianceWork in Process Select Select Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending Variance Select Select Cost of Goods SoldFixed Overhead ControlFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending Variance Select Select Cost of Goods SoldFixed Overhead Volume VarianceVariable Overhead ControlVariable Overhead Efficiency VarianceVariable Overhead Spending Variance Select Select Feedback Incorrect Third, close the overhead variances Note Close the variances with a debit balance first For compound entries, if an amount box does not require an entry, leave it blank Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending Variance Select Select Cost of Goods SoldFixed Overhead ControlFixed Overhead Volume VarianceVariable Overhead ControlWork in Process Select Select Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Spending VarianceWork in Process Select Select Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Efficiency VarianceWork in Process Select Select Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending Variance Select Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending Variance Select

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Required: 1. Compute price and usage variances for direct materials. MPV $fill in the blank a64132fb3ff7f91_1 FavorableUnfavorableFavorable MUV $fill in the blank a64132fb3ff7f91_3 FavorableUnfavorableUnfavorable 2.

Required:

1. Compute price and usage variances for direct materials.

MPV	$fill in the blank a64132fb3ff7f91_1	FavorableUnfavorableFavorable
MUV	$fill in the blank a64132fb3ff7f91_3	FavorableUnfavorableUnfavorable

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

Labor Rate Variance	$fill in the blank a64132fb3ff7f91_5	FavorableUnfavorableFavorable
Labor Efficiency Variance	$fill in the blank a64132fb3ff7f91_7	FavorableUnfavorableUnfavorable

3. Compute the fixed overhead spending and volume variances.

Spending Variance	$fill in the blank a64132fb3ff7f91_9	FavorableUnfavorableFavorable
Volume Variance	$fill in the blank a64132fb3ff7f91_11	FavorableUnfavorableUnfavorable

4. Compute the variable overhead spending and efficiency variances.

Spending Variance	$fill in the blank a64132fb3ff7f91_13	FavorableUnfavorableUnfavorable
Efficiency Variance	$fill in the blank a64132fb3ff7f91_15	FavorableUnfavorableUnfavorable

Feedback

1. MPV (Materials price variance) = (AP SP) x AQ MUV (Materials usage variance) = (AQ SQ) x SP

2. LRV (Labor rate variance) = (AR SR) x AH LEV (Labor efficiency variance) = (AH SH) x SR

3. Fixed OH spending variance = AFOH - BFOH Volume variance = Budgeted fixed OH Applied fixed OH

4. Variable overhead spending variance = (Actual variable OH rate (AVOR) (SVOR) Standard variable OH rate) x AH Variable overhead efficiency variance = (AH SH) x SVOR

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

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 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

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: $161,600
Variable overhead: $122,000

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:

Cost of Goods SoldDirect Labor Efficiency VarianceDirect Materials Price VarianceDirect Materials Usage Variance	- Select -	- Select -
Cost of Goods SoldDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Usage Variance	- Select -	- Select -
Direct Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage VarianceVariable Overhead ControlVariable Overhead Spending Variance	- Select -	- Select -
Direct Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price VarianceVariable Overhead ControlVariable Overhead Spending Variance	- Select -	- Select -
Cost of Goods SoldDirect Labor Rate VarianceDirect Materials Price VarianceVariable Overhead ControlVariable Overhead Spending Variance	- Select -	- Select -

Feedback

5. f. The OH variances are disposed of by closing them to Cost of Goods Sold if they are not material or by prorating them among Work in Process, Finished Goods, and Cost of Goods Sold if they are material.

Second, recognize the overhead variances: If an amount box does not require an entry, leave it blank.

Cost of Goods SoldFixed Overhead ControlFixed Overhead Volume VarianceVariable Overhead ControlWork in Process	- Select -	- Select -
Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Spending VarianceWork in Process	- Select -	- Select -
Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Efficiency VarianceWork in Process	- Select -	- Select -
Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending Variance	- Select -	- Select -
Cost of Goods SoldFixed Overhead ControlFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending Variance	- Select -	- Select -
Cost of Goods SoldFixed Overhead Volume VarianceVariable Overhead ControlVariable Overhead Efficiency VarianceVariable Overhead Spending Variance	- Select -	- Select -

Feedback

Incorrect

Third, close the overhead variances: Note: Close the variances with a debit balance first. For compound entries, if an amount box does not require an entry, leave it blank.

Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending Variance	- Select -	- Select -
Cost of Goods SoldFixed Overhead ControlFixed Overhead Volume VarianceVariable Overhead ControlWork in Process	- Select -	- Select -
Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Spending VarianceWork in Process	- Select -	- Select -
Cost of Goods SoldFixed Overhead ControlVariable Overhead ControlVariable Overhead Efficiency VarianceWork in Process	- Select -	- Select -
Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending Variance	- Select -
Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceVariable Overhead Efficiency VarianceVariable Overhead Spending Variance		- Select -