There was a mistake and instead of .20 its supposed to be .15 for fixed OH variable OH
Direct Materials, Direct Labor, and Overhead Variances, Journal Entries Rand Company produces dry fertilizer. At the beginning of the year, Rand had the following standard cost sheet: Direct materials (8 lbs. @ $1.35) $10.80 Direct labor (0.15 hr. @ $18.00) 2.70 *IS 15 Fixed overhead (Ohr. @ $3.00) 0.60 Variable overhead (Ohr. @ $1.70) 0.34 Standard cost per unit $14.44 Overhead rates are computed using practical volume, which is 50,000 units. The actual results for the year are as follows: a. Units produced: 53,000 b. Direct materials purchased: 408,000 pounds at $1.32 per pound c. Direct materials used: 407,000 pounds d. Direct labor: 10,500 hours at $17.95 per hour e. Fixed overhead: $36,570 f. Variable overhead: $18,000 Required: 1. Compute price and usage variances for direct materials. MPV 12,240 Unfavorable MUV S 22,950 Favorable 2. Compute the direct labor rate and labor efficiency variances. Labor Rate Variance 525 Favorable Labor Efficiency Variance 45,900 Unfavorable 3. Compute the fixed overhead spending and volume variances. Spending Variance 6,570 Unfavorable f. Prepare journal entries for the closing out of variances to Cost of Goods Sold. Post amounts from highest to lowest. If an amount box does not require an entry, leave it blank. First, close direct materials and direct labor variances: Cost of Goods Sold o Direct Materials Usage Variance 0 Direct Labor Rate Variance 0 Direct Labor Efficiency Variance 0 Direct Materials Price Variance 0 Feedback Check My Work Second, recognize the overhead variances: Post amounts from highest to lowest. If an amount box does not require an entry, leave it blank. Variable Overhead Control 0 Fixed Overhead Spending Variance 0 Fixed Overhead Control 0 Fixed Overhead Volume Variance Variable Overhead Efficiency Variance Variable Overhead Spending Variance 0 Third, close the overhead variances: Post amounts from highest to lowest. If an amount box does not require an entry, leave it blank. Fixed Overhead Volume Variance o 0 Variable Overhead Efficiency Variance Variable Overhead Spending Variance Cost of Goods Sold 0 Fixed Overhead Spending Variance 0 Feedback Check My Work Partially correct Feedback Check My Work Partially correct Direct Materials, Direct Labor, and Overhead Variances, Journal Entries Rand Company produces dry fertilizer. At the beginning of the year, Rand had the following standard cost sheet: Direct materials (8 lbs. @ $1.35) $10.80 Direct labor (0.15 hr. @ $18.00) 2.70 *IS 15 Fixed overhead (Ohr. @ $3.00) 0.60 Variable overhead (Ohr. @ $1.70) 0.34 Standard cost per unit $14.44 Overhead rates are computed using practical volume, which is 50,000 units. The actual results for the year are as follows: a. Units produced: 53,000 b. Direct materials purchased: 408,000 pounds at $1.32 per pound c. Direct materials used: 407,000 pounds d. Direct labor: 10,500 hours at $17.95 per hour e. Fixed overhead: $36,570 f. Variable overhead: $18,000 Required: 1. Compute price and usage variances for direct materials. MPV 12,240 Unfavorable MUV S 22,950 Favorable 2. Compute the direct labor rate and labor efficiency variances. Labor Rate Variance 525 Favorable Labor Efficiency Variance 45,900 Unfavorable 3. Compute the fixed overhead spending and volume variances. Spending Variance 6,570 Unfavorable f. Prepare journal entries for the closing out of variances to Cost of Goods Sold. Post amounts from highest to lowest. If an amount box does not require an entry, leave it blank. First, close direct materials and direct labor variances: Cost of Goods Sold o Direct Materials Usage Variance 0 Direct Labor Rate Variance 0 Direct Labor Efficiency Variance 0 Direct Materials Price Variance 0 Feedback Check My Work Second, recognize the overhead variances: Post amounts from highest to lowest. If an amount box does not require an entry, leave it blank. Variable Overhead Control 0 Fixed Overhead Spending Variance 0 Fixed Overhead Control 0 Fixed Overhead Volume Variance Variable Overhead Efficiency Variance Variable Overhead Spending Variance 0 Third, close the overhead variances: Post amounts from highest to lowest. If an amount box does not require an entry, leave it blank. Fixed Overhead Volume Variance o 0 Variable Overhead Efficiency Variance Variable Overhead Spending Variance Cost of Goods Sold 0 Fixed Overhead Spending Variance 0 Feedback Check My Work Partially correct Feedback Check My Work Partially correct
