Variances, Entries, and Income Statement

A summary of Glendale Company's manufacturing variance report for May follows:

Total Standard Costs $(9,200$ units$)$ Actual Costs $(9,200$ units$)$ Variances Direct material $$34,040$ $$37,730$ $$3,690$ U Direct labor $179,400178,920480$ F Variable overhead $9,6609,480180$ F Fixed overhead $9,6609,660-$ $$232,760$ $$235,790$ $$3,030$ U

Standard material cost per unit of product is $0\mathrm{.}5$ pounds at $$7\mathrm{.}40$ per pound, and standard direct labor cost is $1\mathrm{.}5$ hours at $$13\mathrm{.}00$ per hour. The total actual materials cost represents $4,900$ pounds purchased at $$7\mathrm{.}70$ per pound. Total actual labor cost represents $14,200$ hours at $$12\mathrm{.}60$ per hour. According to standards, variable overhead rate is applied at $$0\mathrm{.}70$ per direct labor hour $($based on a normal capacity of $15,000$ direct labor hours or $10,000$ units of product$).$ Assume that all fixed overhead is applied to work in progress inventory.

a$.$ Determine the following variances:

Do not use negative signs with any of your answers. Next to each variance answer, select either $"$F$"$ for Favorable or $"$U$"$ for Unfavorable.

Materials Variances Actual cost:

Split cost:

Standard cost:

Materials price

Materials efficiency

Labor Variances Actual cost:

Split cost:

Standard cost:

Labor rate

Labor efficiency

Variable Overhead Variances Actual cost:

Split cost:

Standard cost:

Variable overhead spending

Variable overhead efficiency

b$.$ Prepare general journal entries to record standard costs, actual costs, and related variances for material, labor, and overhead.

General Journal Description Debit Credit Materials inventory

To record the purches of direct materials Work in process inventory

To record the use of direct materials Work in process inventory

Labor rate variance

To record direct labor costs and related cost variances. Work in process inventory

Manufactruing overhead

To apply variable overhead to work in progress and record related cost variances

To apply fixed overhead to work in progress

c$.$ Prepare journal entries to record the transfer of all completed units to Finished Goods Inventory and the subsequent sale of $8,400$ units on account at $$54$ each $($assume no beginning finished goods inventory$).$

General Journal Description Debit Credit

To record completion ofunits

To record sale ofunits

To record cost ofunits

d$.$ Prepare a partial income statement $($through gross profit on sales$)$ showing gross profit based on standard costs, the incorporation of variances, and gross profit based on actual costs.

Do not use negative signs with any of your answers below.

Glendale Company

Partial Income Statement

For the Month Ended May $31$ Sales

Cost of goods at standard cost

Gross profit at standard cost

Net cost variance Material

Labor

Variable overhead

Gross profit at actual cost