Question

Required information [The following information applies to the questions displayed below) Hart Company made 3,060 bookshelves using 22.060 board feet of wood costing $273,544. The company's direct materials standards for one bookshelf are 8 board feet of wood at $12.30 per board foot. AQ - Actual Quantity SQ - Standard Quantity AP Actual Price SP - Standard Price (1) Compute the direct materials price and quantity variances and classify each as favorable or unfavorable (2) Hart applies management by exception by investigating direct materials variances of more than 5% of actual direct materials costs. Which direct materials variances will Hart investigate further? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the direct materials price and quantity variances and classify each as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.)

Answer 1

Req 1

Actual Cost

Standard Cost

AQ

X

AP

AQ

X

SP

SQ

X

SP

22060

X

12.4

22060

X

12.3

24480

X

12.3

273,544

271,338

301,104

$2206

U

$29,766

F

Direct Material

Direct Material

Price Variance

Qty variance

Direct material price variance	$2,206	U
Direct material quantity variance	$29,766	F
Direct material cost variance	$27,560	F

Req 2

Direct material quantity variance

JOURNAL

Event	Particulars	Debit	Credit
1	Work in Process Inventory Dr	$301,104
	Direct material Price variance Dr	$2,206
	To Accounts payable		$273,544
	To Direct material quantity variance		$29,766
	(To record purchase and use of material)
2	Direct material quantity variance Dr	$29,766
	To Direct material price variance		$2,206
	To Cost of goods sold		$27,560
	(To close material variance to cost of goods sold)