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

EZ Tees Corporation produces T$-$shirts. The company uses a standard costing system and has set the following standards for direct materials and direct labor $($for one shirt$)$:

Fabric $(1\mathrm{.}5$ yds$.$ @ $$2\mathrm{.}80)$ $$4\mathrm{.}20$

Direct labor $(1\mathrm{.}1$ hr$.$ @ $$20)22\mathrm{.}00$

Total prime cost $$26\mathrm{.}20$

During the year, EZ Tees produced $9,800$ T$-$shirts. The actual fabric purchased was $14,600$ yards at $$2\mathrm{.}72$ per yard. There were no beginning or ending inventories of fabric. Actual direct labor was $10,900$ hours at $$19\mathrm{.}60$ per hour.

Required:

Question Content Area

$1.$ Compute the costs of fabric and direct labor that should have been incurred for the production of $9,800$ T$-$shirts.

Direct materials $fill in the blank bca$7$fefadfaf$04$c$\_1$

$41,160$

Direct labor $fill in the blank bca$7$fefadfaf$04$c$\_2$

$215,600$

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

Direct materials $fill in the blank bca$7$fefadfaf$04$c$\_3$

$1,288$

Favorable

Direct labor $fill in the blank bca$7$fefadfaf$04$c$\_5$

$1,960$

Favorable

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

Materials Price Variance $fill in the blank bca$7$fefadfaf$04$c$\_7$

$116\mathrm{.}80$

Favorable

Materials Usage Variance $fill in the blank bca$7$fefadfaf$04$c$\_9$

$280$

Unfavorable

Question Content Area

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

Price Variance

Materials

Direct Materials Price Variance

$116$

Accounts Payable

Usage Variance

Work in Process

Direct Materials Usage Variance

$280$

Materials

Question Content Area

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

Labor Rate Variance $fill in the blank ae$8997$fc$1$fbafa$1\_1$

$4,360$

Favorable

Labor Efficiency Variance $fill in the blank ae$8997$fc$1$fbafa$1\_3$

$2,400$

Unfavorable

Question Content Area

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

blank

Work in Process

$215,600$

Direct Labor Efficiency Variance

$2,400$

Direct Labor Rate Variance

$4,360$

Wages Payable

$213,640$