Variances, Entries, and Income Statement A summary of Glendale Company's manufacturing variance report for May 2016 follows Direct material Direct labor Variable overhead Fixed overhead Total Standard Costs (9,200 units) Actual Costs (9,200 units) Variances 42,630 $3,990 U 80 F 23,230 230 F $38,640 193,200 23,460 9,660 $264,960 193,120 9,660 $268,640 $3,680 U Standard material cost per unit of product is 0.5 pounds at $8.40 per pound, and standard direct labor cost is 1.5 hours at $14.00 per hour. The total actual materials cost represents 4,900 pounds purchased at $8.70 per pound. Total actual labor cost represents 14,200 hours at $13.60 per hour. According to standards, variable overhead rate is applied at $1.70 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: 42,630 Split cost 2,610 X Standard cost: 2,520X Split cost 2,610X Standard cost: 2,520 x Materials price 1,470 Materials efficiency $ 2,520 Labor Variances Actual cost: $193,120 Split cost 82.35 X Standard cost: 193,200 Labor rate 5,680 Labor efficiency 5,600 Variable Overhead Variances Actual cost: $23,230 Split cost $24,140 Standard cost: $23,460 Variable overhead spending $ 230 X Variable overhead efficiency $ 680 U 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 41,160 Materials price variance 1,470 Accounts payable 42,630 To record the purches of direct materials Work in process inventory 38,640 Materials efficiency variance 2,520 Materials inventory 41,160 To record the use of direct materials Work in process inventory 193,200 Labor efficiency variance 5,600 Labor rate variance 5,680 Wages payable 93,120 To record direct labor costs and related cost variances Work in process inventory 23,460 Variable overhead efficiency variance 680 V Variable overhead spending variance 910 Manufactruing overhead 23,230 To apply variable overhead to work in progress and record related cost variances Materials efficiency variance + X 5,680X Work in process inventory 9,660 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 Finished goods inventory 268,640X General Journal Description Debit Credit Finished goods inventory 268,640 Work in process inventory 38,640 X To record completion of units Materials price variance 1,470X Materials efficiency variance 2,520 X To record sale of units Work in process inventory 193,200 X Materials efficiency variance 5,600 X To record cost of units 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, 2016 Sales Cost of goods at standard cost Do not use negative signs with any of your answers below. Glendale Company Partial Income Statement For the Month Ended May 31, 2016 Sales 0 X 0 X Cost of goods at standard cost Gross profit at standard cost Net cost variance 0 X Material Labor 0 x Variable overhead 245,280 X 245,280 X Gross profit at actual cost