Question

Zoller Company produces a dark chocolate candy bar. Recently, the company adopted the following standards for one bar of the candy: Direct materials (6.30 oz. @ $0.20) $1.26 Direct labor (0.08 hr. @ $18.00) 1.44 Standard prime cost $2.70 During the first week of operation, the company experienced the following actual results: a. Bars produced: 144,000. b. Ounces of direct materials purchased: 907,500 ounces at $0.21 per ounce. C. There are no beginning or ending inventories of direct materials. d. Direct labor: 11,380 hours at $17.20. Required: Instructions for parts 1 and 2: If a variance is zero, enter "0" and select "Not applicable" from the drop down box. 1. Compute price and usage variances for direct materials. Materials Price Variance Materials Usage Variance 2. Compute the rate variance and the efficiency variance for direct labor. Labor Rate Variance Labor Efficiency Variance 3. Prepare the journal entries associated with direct materials and direct labor. If an amount box does not require an entry, leave it blank or enter "0". Record purchase of materials

Answer 1

Solution. Page! mall Materials Price Variance (Standard Price (- Actual Price ) X Actual Quantity =($ 0.20 - $0.21) X 90 7,500 89075 Unfauorable Materials Usafe Variance z Standard Quantity Actual ) x Standard Paice for Actual output Quantity = ((6.30 02. X 144,000) – 907,500) $0.20 (907,200 (-907, 500) X $0.20 $60 Unfauorable Answer I Materials Price Heilance $9075 $9075 Unfavorable $ 60 Unfavorable z Materials Usage 2 Usage Heriance

Requirement 2 lake Labor Rate Variance : (Standard Rate to Actual Pate) x Actual Labor Hours = ($18 (-) $17,20) X11,3 80 hours 89,104 Fauorable Labor Efficiency Verience = Standead Hours (-) Actual x Standard Rate for Actual antpert Hours (10.08 ha.X 144,000) (-) 11,380 hours) $ 18 - (11,520 (-) 11,380) X 618 2 $2,520 Favorable Answer 2 Labor Rate Variance 12 89104 Fauorable Labor Efficiency Verime $2,520 Fauorable N

Requirement ? Tournal Entries Page 3 Amount Debit Gedit $181.500 $ 9075 $190,575 $181,440 $60 Materials ($0.20x907,500) Direct Materials Praire Variance Accounts Payable ($0.21 X907,500) ( Record purchase of materials Work in Process ($0,20x907, 200) Direct Materials Usage Variance Materials ($0.200907,500) ( Record usage of materials) Work in Paccess ($18 X11,520) Direct Labor Rate Variance Direct labor Efficiency Hariance Wages Payable ($17.20X11,380) (Record Labor Variances) $181,500 $207,360 $9104 $2,520 $195,736