Yodo Inc. is a manufacturer of a Scientific gadget called a Spectre. Yodo Inc. uses a standard costing system to assist in the control of costs.

The following estimates are made, setting standards and calculating the pre-determined overhead rate

at the beginning of fiscal 2018:

Denominator level of activity 27,000 machine hours

Variable overhead costs $162,000

Fixed overhead costs $648,000

Total overhead costs $810,000

At standard, each unit requires 2.5 machine hours to complete. Overhead costs are applied to production based on standard machine hours. Each Spectre requires 6 kilograms of raw material, which has a standard cost of $3.40 per kilogram and 1.5 hours of direct labour hours which has a standard rate of $15 per hour.

Actual operating activity and costs for 2018 were as follows:

Activity: Number of Spectres produced 9,000 units

Actual machine-hours recorded 23,400

Actual labour hours worked 15,750

Costs incurred: Direct labour cost $215,775

Manufacturing overhead cost $792,180(of which $651,600 was fixed)

At the beginning of 2018, there were 500 kilograms of raw materials on hand. 55,800 kilograms of raw materials were purchased during the year at a total cost of $238,824. 3,700 kilograms remained in inventory at year end.

REQUIRED:

1.Calculate the following production varances:

a) Materials price and quantity variances

b) Labour rate and efficiency variances

c) Variable overhead spending and efficiency variances

d) Fixed overhead budget and volume variances

2) In relation to the standard costing information provided and the variances calculated at 1. above:

a) Prepare the journal entry to record the incurrence of direct labour cost

b) Prepare the journal entry to record the purchase of Raw materials on account

c) Prepare the journal entry to record the use of materials