You have a business manufacturing snarky masks for hipster wannabes.You produce these masks in batches of 100.Each mask has the following manufacturing standards (i.e., budgets):

Direct materials

0.5 yards of material

$75.00 per yard

Direct labor

2.5 Direct Labor Hours

$20.00 per Direct Labor Hour

Variable Overhead

$60.00 per DLH

Fixed Overhead

$20,000 per month

Original (Static) budget

10 batches per month

There is no beginning or ending inventory for WIP and Finished Goods.You have sufficient beginning direct material inventory of material that you do not need to purchase any during the month.

During March 2021 you made 11 batches of masks (100 masks in each batch) and spent/used/incurred the following:

Yards of material

560 yards

$40,538 in total

Direct labor

2,625 DLH

$51,340 in total

Variable overhead

$165,000 in total

Fixed overhead

$23,000 in total

Part 2

Prepare the journal entries to record the activities discussed above:

Record the use of direct materials with price and usage variances

Record the incurrence of direct labor with rate and efficiency variances

Record the incurrence of variable and fixed overhead with spending, efficiency, and production volume variances

Record the transfer of COGM to FG Inventory

Record the transfer of goods sold from FG Inventory to COGS

Close all variances to COGS

Post these entries to T-accounts and come to ending balances:

Assume all overhead spending comes from cash

Remember that there is no beginning or ending inventory for WIP and FG