Variances, Total Overhead Variances, and Variance Reconciliation

Sanchez Company planned to produce $13,000$ units of its only product during the year. Sanchez established the following standard cost data for this product prior to the beginning of the year:

Per Unit

Direct materials $(3\mathrm{.}0$ lbs$.$ @ $$7\mathrm{.}70$ per lb$.)$ $$23\mathrm{.}10$

Direct labor $(2\mathrm{.}3$ hrs$.$ @ $13\mathrm{.}80$ per hr$.)31\mathrm{.}74$

Variable overhead $(2\mathrm{.}3$ hrs$.$ @ $6\mathrm{.}10$ per hr$.)14\mathrm{.}03$

Total standard cost per unit $$68\mathrm{.}87$

Total budgeted fixed overhead $$230,400$

Assume that Sanchez $(1)$ actually produced $12,000$ units, $(2)$ used $26,000$ pounds of direct materials in production, $(3)$ and incurred the following actual total costs:

Total Cost

Direct materials purchased $(29,000$ lbs$.$ @ $$8\mathrm{.}00$ per lb$.)$ $$232,000$

Direct labor $(28,000$ hrs$.$ @ $13\mathrm{.}65$ per hr$.)$ $$382,200$

Variable overhead $$128,400$

Fixed overhead $$230,400$

Total actual costs $$973,000$

Calculate the following variances. Enter all amounts as positive numbers, rounded to the nearest dollar, and identify the variances as favorable or unfavorable:Variances and Journal Entries

Jacobs Company manufactures a single product and uses a standard costing system. The nature of its product dictates that it be sold in the period it is produced. Thus, no ending work in process or

finished goods inventories remain at the end of the period. However, raw materials can be stored and are purchased in bulk when prices are favorable. Per$-$unit standard product costs are material,

$$8\mathrm{.}50(4$ pounds$)$; labor, $$6\mathrm{.}50(0\mathrm{.}5$ hour$)$; and variable overhead, $$4\mathrm{.}50($based on direct labor hours$).$ Budgeted fixed overhead is $$54,000.$

Jacobs accounts for all inventories and cost of goods sold at standard cost and records each variance in a separate account. The following data relate to May when $17,700$ finished units were

produced.

a$.$ Assume Jacobs purchased $69,000$ pounds of raw materials on account at $$2\mathrm{.}70$ per pound and used $67,000$ pounds in May's production, prepare a journal entry to record the purchase of raw

materials and a separate journal entry to record the use of raw materials in production. Record these entries using standard costs and include the appropriate materials variances.

b$.$ Assuming employees worked $8,900$ direct labor hours at an average hourly rate of $$12\mathrm{.}20,$ prepare a journal entry to record actual costs, standard costs, and any labor variances.

c$.$ Assuming Jacobs' actual and applied variable overhead was $$81,200$ and that budgeted and actual fixed overhead incurred was $$54,000,$ prepare a journal entry to record actual and standard

overhead costs and any overhead variances.