Question

Compute the indard direct labor hours allowed for the production of 280,000 units. Exercise 9.14 Wrect Materials and Direct Labor Variances Zoller Company produces a dark chocolate candy bar. Recently, the company adopted the fol- lowing standards for one bar of the candy: Direct materials (6.3 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: 143,000. b. Ounces of direct materials purchased: 901,200 ounces at S0.21 ner ounce. C. There are no beginning or ending inventories of direct materials.bbszor d. Direct labor: 11,300 hours at $17.30. So b o b adi lalo Required: O x imetom 13tbols 1. Compute price and usage variances for direct materials. 2. Compute the rate variance and the efficiency variance for direct labor 3. Prepare the journal entries associated with direct materials and direct labor.

Answer 1

1.

Direct materials price variance	$       9,012	Unfavorable
Direct materials usage variance	$             60	Unfavorable

Working:

Actual Cost								Standard Cost
AQ	x	AP		AQ	x	SP		SQ	x	SP
901200	x	0.21		901200	x	0.20		900900	x	0.20
			189252				180240				180180
							9012				60
SQ = 143000 x 6.3 oz = 900900

2.

Direct labor rate variance	$       7,910	Favorable
Direct labor efficiency variance	$       2,520	Favorable

Working:

Actual Cost								Standard Cost
AH	x	AR		AH	x	SR		SH	x	SR
11300	x	17.30		11300	x	18.00		11440	x	18.00
			195490				203400				205920
							-7910				-2520
SH = 143000 x 0.08 = 11440

3.

Account Titles and Explanations	Debit	Credit
Raw materials inventory (901200 x $0.20)	180240
Direct materials price variance	9012
Accounts payable/Cash (901200 x $0.21)		189252
(To record raw material purchases)
Work in process inventory (900900 x $0.20)	180180
Direct materials usage variance	60
Raw materials inventory (901200 x $0.20)		180240
(To record raw material issued to production)
Work in process inventory (11440 x $18.00)	205920
Direct labor rate variance		7910
Direct labor efficiency variance		2520
Wages payable/Cash (11300 x $17.30)		195490
(To record direct labor incurred)