1. Standard Costs, Decomposition of Budget Variances, Direct Materials and Direct Labor

   Haversham Corporation produces dress shirts. The company uses a standard costing system and has set the following standards for direct materials and direct labor (for one shirt):

   Fabric (1.5 yds. @ $2.80)	$4.20
   Direct labor (1.1 hr. @ $20)	22.00
   Total prime cost	$26.20

   During the year, Haversham produced 9,700 shirts. The actual fabric purchased was 14,450 yards at $2.72 per yard. There were no beginning or ending inventories of fabric. Actual direct labor was 10,790 hours at $19.50 per hour.

   Required:

   1. Compute the costs of fabric and direct labor that should have been incurred for the production of 9,700 shirts.

   Direct materials	$fill in the blank 46d45ffeafe8073_1
   Direct labor	$fill in the blank 46d45ffeafe8073_2

   2. Compute the total budget variances for direct materials and direct labor.

   Direct materials	$fill in the blank 46d45ffeafe8073_3	FavorableUnfavorable
   Direct labor	fill in the blank 46d45ffeafe8073_5	FavorableUnfavorable

   3. Break down the total budget variance for direct materials into a price variance and a usage variance.

   Materials Price Variance	$fill in the blank 46d45ffeafe8073_7	FavorableUnfavorable
   Materials Usage Variance	$fill in the blank 46d45ffeafe8073_9	FavorableUnfavorable

   Prepare the journal entries associated with these variances. If an amount box does not require an entry, leave it blank or enter "0".

   Price Variance	Accounts PayableCashCost of Goods SoldDirect Materials Usage VarianceMaterialsWork in Process	- Select -	- Select -
   	Accounts ReceivableCashCost of Goods SoldDirect Materials Price VarianceWork in Process	- Select -	- Select -
   	Accounts PayableDirect Materials Usage VarianceFinished GoodsMaterialsWork in Process	- Select -	- Select -
   Usage Variance	Accounts PayableCashDirect Materials Price VarianceMaterialsOverhead ControlWork in Process	- Select -	- Select -
   	Accounts PayableDirect Materials Usage VarianceFinished GoodsOverhead Control Work in Process	- Select -	- Select -
   	Accounts PayableCashDirect LaborMaterialsWork in Process	- Select -	- Select -

   4. Break down the total budget variance for direct labor into a rate variance and an efficiency variance.

   Labor Rate Variance	$fill in the blank 7c4b32087fb6038_1	FavorableUnfavorable
   Labor Efficiency Variance	$fill in the blank 7c4b32087fb6038_3	FavorableUnfavorable

   Prepare the journal entries associated with these variances. If an amount box does not require an entry, leave it blank or enter "0".

   	Accounts PayableCashDirect Materials Price VarianceDirect Materials Usage VarianceMaterialsOverhead ControlWork in Process	- Select -	- Select -
   	Accounts PayableCashDirect Labor Efficiency VarianceDirect Materials Price VarianceDirect Materials Usage VarianceMaterialsFinished Goods	- Select -	- Select -
   	Accounts PayableCashDirect Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage VarianceFinished GoodsMaterials	- Select -	- Select -
   	Direct Labor Efficiency VarianceDirect Labor Rate VarianceFinished GoodsWages PayableWork in Process	- Select -	- Select -

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