Question

prepare 3

Materials used ? Labour cost ? ? nal Entries (LO2, LO3. L04 PROBLEM 10B-3 Comprehensive Variance Analysis: Journal Entries ILO LOS. LO6, LO9] Haliburton Mills Inc. is a large producer of men's and women's clothing standard costs for all of its products. The standard costs and actual costs for are given below for one of the company's product lines (per unit of product 's clothing. The company uses al costs for a recent period Standard Cost Actual Cost $14.40 720 Direct materials: Standard: 40 metres at $3.60 per metre. Actual: 44 metres at $335 per metre.... Direct labour Standard: 16 hours at $4.50 per hour .... Actual: 14 hours at $485 per hour Variable manufacturing overhead: Standard: 16 hours at $180 per hour.... Actual: 14 hours at $2.15 per hour ...... Fixed manufacturing overhead: Standard: 16 hours at $3.00 per hour .... Actual: 14 hours at $305 per hour ...... Total cost per unit 288 480 $29.28 $2881 Adual costs: 4800 units at $2881 .......... Standard costs: 4800 units at $29.28...... Difference in cost-favourable............ $138.288 140.544 $ 2.256 . During this period, the company produced 4.800 units of product. A compare dard and actual costs for the period on a total cost basis is also given above. duct. A comparison of stan-

journal entries for each and explain all things that have to find in question

Answer 1

Determine the direct materials price variance as shown below: Direct materials price variance = Actual quantity < (Actual price - Standard price) Number of units x 1 * ($3.35 each - $3.60 each) Actual metres =[4,800 units x 4.4 metres] * [-50.25 each] = 21,120 metres [-50.25 each] = $5,280 (Favorable) Thus, the direct materials price variance is $5.280 (Favorable) Determine the direct materials quantity variance as shown below: Direct materials quantity variance = Standard Price ® (Actual quantity - Standard quantity) Actual units x) Actual units x 7 = $3.60 x Actual metres Standard metres (4,800 units ) (4,800 units x) = $3.60 x * 4.4 metres 4.0 metres = $3.60 x [21,120 metres - 19,200 metres = $3.60 x 1.920 metres = $6,912 (un favorable) Thus, the direct materials quantity variance is $6,912 (unfavorable)

b. Prepare journal entries to record the direct materials variances as shown below: Date Ref. Credit Debit $76.032 $5.280 $70.752 General Journal Account Titles and Explanation Materials [4.800 units x 4.4 metres x $3.60] Materials price variance ($76,032 - $70,752) Accounts payable [4.800 units x 4.4 metres $3.35) (To record the purchase of materials and price variance) Work in process [4.800 units x 4.0 metres $3.60) Materials quantity variance ($76.032 - $69.120) Materials [4.800 units x 4.4 metres x $3.60] (To record the usage of materials and quantity variance) $69.120 $6.912 $76.032 Determine the direct labor rate variance as shown below: Direct labor rate variance = Actual hours x (Actual rate - Standard rate) Number of units x ] Actual hours worked * ($4.85 each - $4.50 each = [4,800 units x 1.4 hours) ~ [0.35 each] = 6,720 metres x ($0.35 each] = $2,352 (Unfavorable) Thus, the direct labor rate variance is $2,352 (Unfavorable).

Determine the direct labor efficiency variance as shown below: Direct labor efficiency variance = Standard rate x (Actual hours - Standard hours) Actual units x) Actual units X ] = $4.50 x Actual hours Standard hours (4.800 units x) (4.800 units x) = $4.50 X [ 1.4 hours 1.6 hours = $4.50 x [6,720 hours - 7,680 hours) = $4.50 (-960 hours) = $4,320 (Favorable) Thus, the direct labor efficiency variance is $4,320 (Favorable)

Prepare a journal entry to record the wages including variances relating to labor as shown below: Date Ref. Credit General Journal Account Titles and Explanation Work in process (4.800 units x 1.6 hours $4.50] Labor rate variance Labor efficiency variance ($76.032 - $70,752] Wages payable [4.800 units x 1.4 hours $4.85) (To record the purchase of materials and price Debit $34,560 $2.352 $4.320 $32,592 Determine the variable manufacturing overhead spending variance as shown below: Variable overhead spending variance = Actual hours x (Actual rate - Standard rate) Number of units x 1 Actual hours worked * [52.15 each - $1.80 each] = [4,800 units x 1.4 hours) S0.35 each] = 6,720 metres x ($0.35 each] = $2,352 (Unfavorable) manufacturing overhead spending variance is Thus, the variable $2,352 (Unfavorable)

Determine the variable manufacturing overhead efficiency variance as shown below: Variable overhead efficiency variance - Standard rate < (Actual hours - Standard hours) [Actual units ) Actual units x 7 = $1.80 X Actual hours Standard hours (4,800 units X) (4,800 units x) = $1.80 x [1.4 hours 1.6 hours = $1.80 x [6,720 hours - 7,680 hours = $1.80 [-960 hours) = $1,728 (Favorable) manufacturing overhead efficiency variance is Thus, the variable $1,728 (Favorable) Determine the fixed overhead budget variance as shown below: Fixed overhead budget variance = Actual fixed overhead - Budgeted fixed overhead Actual units x (Budgeted hours x ) Actual cost per unit) Standard rate per unit) =(4,800 units X $4.27) - (6,860 hours x $3.00) = $20,496 - $20,580 = $84 (Favorable) Thus, the fixed overhead budget variance is $84 (Favorable)

Determine the fixed overhead volume variance as shown below: Budgeted hours - Fixed overhead volume variance = Standard rate x Standard hours for actual units = $3.00 x [6,860 hours - (Actual units x Standard hours)] = $3.00 x [6,860 hours - (4,800 units 1.60)] = $3.00 [6,860 hours - 7,680 hours) = $3.00 × (-820 hours ] = $2,460 (Favorable) Thus, the fixed overhead volume variance is $2,460 (Favorable).