Question

Direct Labor and Direct Material Variances, Journal Entries meso company produces paper towels. The company has established the following direct materials and direct labor Mandards for one case of paper towels per pulp (3 lbs. $0.40) Labor (2 hrs. $12) Total prime cost 525.20 During the first quarter of the year, Jameson produced 50,000 cases of paper towels. The company purchased and used 150,700 pounds of paper pulp at $0.37 per pound. Actual direct at $12.20 per hour. or used was 101.000 hours Required: Instructions for ports 1 and 2: If a variance is zero, enter "o" and select "Not applicable from the drop down to 1. Calculate the direct material price and usage variances. Master Price Variance Favorable Materials sage Variance Unfavorable 2. Calculate the direct loborrate and efficiency variances. Labor Rate Variance Labor Emocy Variance

Answer 1

1) material price variance = (0.40-0.37)*150700 = 4521 favorable

Material quantity variance = (50000*3-150700)*.40 = 280 Unfavorable

2) Labor rate variance = (12-12.20)*101000 = 20200 Unfavorable

Labor efficiency variance = (100000-101000)*12 = 12000 Unfavorable

3) Journal entry

No	General journal	Debit	Credit
1	Material	60280
	Material price variance		4521
	Account payable		55759
2	Work in process	60000
	Material usage variance	280
	Material		60280
3	Work in process	1200000
	Labor rate variance	20200
	Labor efficiency variance	12000
	wages payable		1232200