Genola Fashions began production of a new product on June 1. The company uses a
ID: 2565447 • Letter: G
Question
Genola Fashions began production of a new product on June 1. The company uses a standard cost system and has established the following standards for one unit of the new product
$3.18
Production reported that 855 direct labor-hours were worked on the new product at a cost of $9,918
For direct materials:
Compute the materials price and quantity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorabl
Prepare journal entries to record the purchase of materials and the use of materials in production. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Record the purchase of materials.
Record use of materials in production.
For direct labor:
Compute the labor rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable,
b. Prepare a journal entry to record the incurrence of direct labor cost for the month. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
Post the entries you have prepared to the following T-accounts:
Prepa
e, and "None" for no effect (i.e., zero variance)
Standard Quantityor Hours Standard Price
or Rate Standard
Cost Direct materials 4.2 yards $6.20 per yard $26.04 Direct labor 0.3 hours $10.60 per hour
$3.18
During June, the following activity was recorded for the new product: a. Purchasing acquired 9,600 yards of material at a cost of $5.93 per yard. b. Production used 8,500 yards of the material to manufacture 1,750 units of the new product. c.Production reported that 855 direct labor-hours were worked on the new product at a cost of $9,918
1.For direct materials:
Compute the materials price and quantity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorabl
b.Prepare journal entries to record the purchase of materials and the use of materials in production. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Record the purchase of materials.
Record use of materials in production.
2.For direct labor:
a.Compute the labor rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable,
b. Prepare a journal entry to record the incurrence of direct labor cost for the month. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
3.Post the entries you have prepared to the following T-accounts:
Prepa
e, and "None" for no effect (i.e., zero variance)
Explanation / Answer
1)a.
Materials Price Variance = Actual Quantity * (Actual Price - Standard Price)
= 9600 yards * ($5.93 - $6.20)
= 9600 * (- $0.27)
= $2592 F
Materials Quantity Variance :-
= Standrad Price (Actual Quantity - Standard Quantity)
= $6.20 * (8500 yards - (1750 units * 4.2 yards per unit))
= $6.20 * 1150 yards
= $7130 U
b. Journal Entries :-
2)a. Labor Rate Variance :-
= Actual Hours * ( Actual Rate - Standard Rate)
= 855 * ($11.6 - $10.6)
= $855 U
Labor Efficiency Variance :-
= Standard Rate * (Actual Hour - Standard Hour)
= $10.60 * (855 - (1750 * 0.3))
= $3498 U
b.
Particulars Debits ($) Credit ($) Raw Materials A/c Dr. (9600 * $6.2) 59520 To Materials Price Variance 2592 To Accounts Payable 56928 Work in Proces A/c Dr. (1750 units * $26.04) 45570 Materials Quantity Variance A/c Dr. 7130 To Raw Materials 52700Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.