Question

Howard Company has established the following standards:

Direct materials: 3.0 pounds at $4.00
Direct labor: 1.3 hours at $10 per hour
Additional information was extracted from the accounting records:
Actual production: 20,000 completed units
Direct materials purchased: 67,000 pounds at $3.60, or $241,200
Direct materials consumed: 65,000 pounds
Actual labor incurred: 25,000 hours at $9.8, or $245,000
Direct-labor rate variance: $42,000 favorable
Direct-labor efficiency variance: $27,000 unfavorable
Assume that the company computes variances at the earliest point in time.

Required:

1. What is the amount of Direct Material Purchase Price Variance?

2. Prepare the journal entry to record the usage of direct materials.

3. Prepare the journal entry to record the incurrence of direct labor costs.

Req a Req band c Prepare the journal entry to record the usage of direct materials and the incurrence of direct labor costs. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record journal entries to record the usage of direct materials. Note: Enter debits before credits. Transaction General Journal Debit Credit b. Record entry Clear entry View general journal

Answer 1

Ans Direct material purchase price variance = A OPC SP-AP) Actual aty purchased SP-AP = 67000 (4.00- 3.60) = 26800 Farorable material usage variance Standard Price (san AQ) = 4( [3x20,000] - 65000) - 20,00 unfavorable B. Date Account titte & Explanation Debit Credit $240,00 $ 20,000 work in process (60,00 84) material usage variance Raw material inventory (650w xy to record usage of materials) $ 269000 $260,000 $ 10,000 work in process incentry (20,000 81.3 hos xlo) Laby Efficiency variance Laby sale variance wages payable * * 1 (to record disect labor Cost) $ Sooo $ 24500

working note Labor sate variance - Actual hours (standard rate. Actual tabor Cart - 2500x10 - 24500 - 500 F Labay Efficiency casiance Standard date (SH's - AH's) - = 10 (120,000x1.3) - 2 500) 10,000 Facourable * * wages payable = work in processo labor Efficiency variance – Labor date Lasiance = 260,000 - 10,00 - 500 = 2usovo
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