Question

Petrillo Company produces engine parts for large motors. The company uses a standard cost system for production costing and control. The standard cost sheet for one of its higher volume products (a valve) is as follows:

Direct materials (7 lbs. @ $5.40)	$37.80
Direct labor (1.75 hrs. @ $18)	31.50
Variable overhead (1.75 hrs. @ $4.00)	7.00
Fixed overhead (1.75 hrs. @ $3.00)	5.25
Standard cost per unit	$81.55

During the year, Petrillo had the following activity related to valve production:

1. Production of valves totaled 20,600 units.

2. A total of 135,600 pounds of direct materials was purchased at $5.36 per pound.

3. There were 10,000 pounds of direct materials in beginning inventory (carried at $5.40 per pound). There was no ending inventory.

4. The company used 36,500 direct labor hours at a total cost of $656,270.

5. Actual fixed overhead totaled $110,000.

6. Actual variable overhead totaled $171,000.

Petrillo produces all of its valves in a single plant. Normal activity is 20,000 units per year. Standard overhead rates are computed based on normal activity measured in standard direct labor hours.

3. Compute overhead variances using a two-variance analysis.

Budget Variance	$fill in the blank 76289cff503001a_9	Unfavorable
Volume Variance	$fill in the blank 76289cff503001a_11	Favorable

6. Prepare all possible journal entries (assuming a four-variance analysis of overhead variances). For compound entries, if an amount box does not require an entry, leave it blank.

a.	Record materials purchase
	Materials	fill in the blank 5aec3202607efe1_2	fill in the blank 5aec3202607efe1_3
	Direct Materials Price Variance	fill in the blank 5aec3202607efe1_5	fill in the blank 5aec3202607efe1_6
	Accounts Payable	fill in the blank 5aec3202607efe1_8	fill in the blank 5aec3202607efe1_9
b.	Record materials usage
	Work in Process	fill in the blank 5aec3202607efe1_11	fill in the blank 5aec3202607efe1_12
	Direct Materials Usage Variance	fill in the blank 5aec3202607efe1_14	fill in the blank 5aec3202607efe1_15
	Materials	fill in the blank 5aec3202607efe1_17	fill in the blank 5aec3202607efe1_18
c.	Record direct labor
	Work in Process	fill in the blank 5aec3202607efe1_20	fill in the blank 5aec3202607efe1_21
	Direct Labor Efficiency Variance	fill in the blank 5aec3202607efe1_23	fill in the blank 5aec3202607efe1_24
	Direct Labor Rate Variance	fill in the blank 5aec3202607efe1_26	fill in the blank 5aec3202607efe1_27
	Wages Payable	fill in the blank 5aec3202607efe1_29	fill in the blank 5aec3202607efe1_30
d.	Close materials usage and labor variances to CGS
	Cost of Goods Sold	fill in the blank 5aec3202607efe1_32	fill in the blank 5aec3202607efe1_33
	Direct Labor Rate Variance	fill in the blank 5aec3202607efe1_35	fill in the blank 5aec3202607efe1_36
	Direct Materials Usage Variance	fill in the blank 5aec3202607efe1_38	fill in the blank 5aec3202607efe1_39
	Direct Labor Efficiency Variance	fill in the blank 5aec3202607efe1_41	fill in the blank 5aec3202607efe1_42
e.	Close price variance to CGS
	Direct Materials Price Variance	fill in the blank 5aec3202607efe1_44
	Cost of Goods Sold		fill in the blank 5aec3202607efe1_46
f.	Record actual variable overhead
	Variable Overhead Control	fill in the blank 5aec3202607efe1_48
	Miscellaneous Accounts		fill in the blank 5aec3202607efe1_50
g.	Record actual fixed overhead
	Fixed Overhead Control	fill in the blank 5aec3202607efe1_52
	Various Accounts		fill in the blank 5aec3202607efe1_54
h.	Apply variable overhead
	Work in Process	fill in the blank 5aec3202607efe1_56
	Variable Overhead Control		fill in the blank 5aec3202607efe1_58
i.	Apply fixed overhead
	Work in Process	fill in the blank 5aec3202607efe1_60
	Fixed Overhead Control		fill in the blank 5aec3202607efe1_62
j.	Record overhead variances
	Variable Overhead Spending Variance	fill in the blank 5aec3202607efe1_64	fill in the blank 5aec3202607efe1_65
	Variable Overhead Efficiency Variance	fill in the blank 5aec3202607efe1_67	fill in the blank 5aec3202607efe1_68
	Fixed Overhead Spending Variance	fill in the blank 5aec3202607efe1_70	fill in the blank 5aec3202607efe1_71
	Fixed Overhead Volume Variance	fill in the blank 5aec3202607efe1_73	fill in the blank 5aec3202607efe1_74
	Fixed Overhead Control	fill in the blank 5aec3202607efe1_76	fill in the blank 5aec3202607efe1_77
	Variable Overhead Control	fill in the blank 5aec3202607efe1_79	fill in the blank 5aec3202607efe1_80
k.	Close spending and efficiency variances to CGS
	Cost of Goods Sold	fill in the blank 5aec3202607efe1_82	fill in the blank 5aec3202607efe1_83
	Variable Overhead Efficiency Variance	fill in the blank 5aec3202607efe1_85	fill in the blank 5aec3202607efe1_86
	Fixed Overhead Spending Variance	fill in the blank 5aec3202607efe1_88	fill in the blank 5aec3202607efe1_89
	Variable Overhead Spending Variance	fill in the blank 5aec3202607efe1_91	fill in the blank 5aec3202607efe1_92
l.	Close volume variance to CGS
	Fixed Overhead Volume Variance	fill in the blank 5aec3202607efe1_94
	Cost of Goods Sold		fill in the blank 5aec3202607efe1_96