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Howard Company has established the following standards: Direct materials: 3.0 pounds at $4.00 Direct labor: 1.3 hours at $10

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Answer #1

Direct Materials Purchase Price Variance = (Actual Price per Pound - Standard Price per Pound) * Actual Pounds Purchased

= ($3.60 per pound - $4 per pound) * 67,000 pounds

= $0.40 per pound * 67,000 pounds

= $26,800 Favorable

Therefore, direct materials purchase price variance is $26,800 favorable.

Journal Entries:

Transaction General Journal Debit Credit
b. Work-in Process Inventory $234,000
   Direct Materials (65,000 pounds * $3.60 per pound) $234,000
(To record the usage of direct materials)
c. Direct Labor (25,000 hours * $9.80) $245,000
   Cash $245,000
(To record the incurrence of direct labor costs)
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