Unit Costs, Multiple Products, Variance Analysis, Journal Entries

Business Specialty, Inc., manufactures two staplers: small and regular. The standard quantities of direct labor and direct materials per unit for the year are as follows:

Small

Regular

Direct materials $($oz$.)$

$6\mathrm{.}0$

$10\mathrm{.}00$

Direct labor $($hrs$.)$

$0\mathrm{.}1$

$0\mathrm{.}15$

The standard price paid per pound of direct materials is $$1\mathrm{.}60.$ The standard rate for labor is $$8\mathrm{.}00.$ Overhead is applied on the basis of direct labor hours. A plantwide rate is used. Budgeted overhead for the year is as follows:

Budgeted fixed overhead

$$360,000$

Budgeted variable overhead

$480,000$

The company expects to work $12,000$ direct labor hours during the year; standard overhead rates are computed using this activity level. For every small stapler produced, the company produces two regular staplers.

Actual operating data for the year are as follows:

Units produced: small staplers, $35,000$; regular staplers, $70,000.$

Direct materials purchased and used: $56,000$ pounds at $$1\mathrm{.}5513,000$ for the small stapler and $43,000$ for the regular stapler. There were no beginning or ending direct materials inventories.

Direct labor: $14,800$ hours$3,600$ hours for the small stapler and $11,200$ hours for the regular stapler. Total cost of direct labor: $$114,700.$

Variable overhead: $$607,500.$

Fixed overhead: $$350,000.$

Required:

$1.$ Prepare a standard cost sheet showing the unit cost for each product. Round standard usage amounts to three decimal places if rounding is required. Round other answers to the nearest cent.

Standard Price

Standard Usage

Standard Cost

Direct materials

$

fill in the blank

fill in the blank

$

fill in the blank

Direct labor

fill in the blank

fill in the blank

fill in the blank

Fixed overhead

fill in the blank

fill in the blank

fill in the blank

Variable overhead

fill in the blank

fill in the blank

fill in the blank

Unit cost

$

fill in the blank

Standard Price

Standard Usage

Standard Cost

Direct materials

$

fill in the blank

fill in the blank

fill in the blank

Direct labor

fill in the blank

fill in the blank

fill in the blank

Fixed overhead

fill in the blank

fill in the blank

fill in the blank

Variable overhead

fill in the blank

fill in the blank

fill in the blank

Unit cost

$

fill in the blank

$2.$ Compute the direct materials price and usage variances for each product.

MPV

$

fill in the blank

FavorableUnfavorable

MUV $($Small$)$

$

fill in the blank

FavorableUnfavorable

MUV $($Regular$)$

$

fill in the blank

FavorableUnfavorable

Prepare journal entries to record direct materials activity. If an amount box does not require an entry, leave it blank.

$1.$

Accounts PayableCashCost of Goods SoldDirect Materials Price VarianceMaterialsWork in Process

Cost of Goods SoldFinished GoodsDirect Materials Price VarianceDirect Materials Usage VarianceMaterialsWork in Process

Accounts PayableCost of Goods SoldDirect Materials Usage VarianceMaterialsOverhead ControlWork in Process

Materials purchase

$2.$

Accounts PayableCost of Goods SoldDirect Materials Price VarianceDirect Materials Usage VarianceMaterialsWork in Process

Accounts PayableCost of Goods SoldDirect Materials Price VarianceDirect Materials Usage VarianceOverhead ControlWork in Process

Accounts PayableCost of Goods SoldDirect Materials Price VarianceFinished GoodsMaterialsWork in Process

Materials usage

$3.$

Accounts PayableCashCost of Goods SoldDirect Materials Price VarianceMaterialsWork in Process

Accounts PayableCashCost of Goods SoldDirect Materials Usage VarianceOverhead ControlWork in Process

Accounts PayableCost of Goods SoldDirect Materials Price VarianceDirect Materials Usage VarianceMaterialsWork in Process

Close materials variances to Cost of goods sold

$3.$ Compute the direct labor rate and efficiency variances for each product.

LRV

$

fill in the blank

FavorableUnfavorable

LEV $($Small$)$

$

fill in the blank

FavorableUnfavorable

LEV $($Regular$)$

$

fill in the blank

FavorableUnfavorable

Prepare journal entries to record direct labor activity. If required, round to the nearest dollar. If an amount box does not require an entry, leave it blank.

$1.$

CashCost of Goods SoldDirect Labor Rate VarianceMiscellaneous AccountsWages PayableWork in Process

CashCost of Goods SoldDirect Labor Efficiency VarianceDirect Labor Rate VarianceOverhead ControlWages Payable

CashCost of Goods SoldDirect Labor Efficiency VarianceDirect Labor Rate VarianceFinished GoodsWork in Process

CashCost of Goods SoldDirect Labor Efficiency VarianceOverhead ControlWages PayableWork in Process

Record labor

$2.$

Cost of Goods SoldDirect Labor Efficiency VarianceFinished GoodsWages PayableWork in Process

CashDirect Labor Efficiency VarianceDirect Labor Rate VarianceMiscellaneous AccountsWages PayableWork in Process

Cost of Goods SoldDirect Labor Efficiency VarianceDirect Labor Rate VarianceOverhead ControlWages Pa