1. Rhodes Corporation manufactures a product with the following standard costs: (85 points)

Direct materials (20 yards @ $1.85 per yard)	$ 37.00
Direct labor (4 hours @ $12.00 per hour)	48.00
Variable factory overhead (4 hours @ $5.40 per hour)	21.60
Fixed factory overhead (4 hours @ $3.60 per hour)	14.40
Total standard cost per unit of output	$121.00

Standards are based on normal monthly production involving 2,000 direct labor hours (500 units of output). The following information pertains to the month of July:

Direct materials purchased (16,000 yards @ $1.82 per yard)

$29,120

Direct materials used (9,400 yards)

Direct labor (1,880 hours @ $12.20 per hour)

22,936

Actual factory overhead

16,850

Actual production in July: 470 units

1. Compute the following variances for the month of July, indicating whether each variance is favorable or unfavorable: (40 points)

	(1)	Materials purchase price variance
	(2)	Materials quantity variance
	(3)	Labor rate variance
	(4)	Labor efficiency variance

b. Based upon your answers in a. prepare journal entries to record: (45 points)

		(1)	The purchase of materials (The materials price variance is recorded at the time of purchase)
		(2)	The use of materials in production
		(3)	The use of labor in production