In all problems involving variances, use “F” and “U” to indicate favorable and unfavorab...

In all problems involving variances, use “F” and “U” to indicate favorable and unfavorable variances, respectively.

Journal entries for materials and labor variances

SDC Inc. has established the following standard cost per unit:

Materials–4 lb @ $4.50 per lb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18.00

Labor-2hr @ $12 per hr . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.00

Although 10,000 units were budgeted, 12,000 units were produced.

The Purchasing department bought 50,000 lb of materials at a cost of $237,500. Actual pounds of materials used were 46,000. Direct labor cost was $287,500 for 25,000 hours worked.

Required:

1. Make journal entries to record the materials transactions, assuming that the materials price variance was recorded at the time of purchase.

2. Make journal entries to record the labor variances.