Begin by journalizing the purchase of direct materials on account, including the related variance. (Prepare a single compound journal entry.) Standards: 3 yards of cloth per unit at $1.00 per yard 2 direct labor hours per unit at $18.50 per hour Overhead allocated at $6.00 per direct labor hour Actual: 2,400 yards of cloth were purchased at $1.05 per yard Employees worked 1,700 hours and were paid $18.00 per hour Actual variable overhead was $3,800 Actual fixed overhead was $6,600 Data Table Direct materials cost variance $120 U Direct materials efficiency variance 600 F Direct labor cost variance 850 F Direct labor efficiency variance 5,550 F Variable overhead cost variance 1,400 U Variable overhead efficiency variance 1,400 F Fixed overhead cost variance 1,000 U Fixed overhead volume variance 2,600 F
Begin by journalizing the purchase of direct materials on account, including the related variance. (Prepare a single compound journal entry.) Standards: 3 yards of cloth per unit at $1.00 per yard 2 direct labor hours per unit at $18.50 per hour Overhead allocated at $6.00 per direct labor hour Actual: 2,400 yards of cloth were purchased at $1.05 per yard Employees worked 1,700 hours and were paid $18.00 per hour Actual variable overhead was $3,800 Actual fixed overhead was $6,600 Data Table Direct materials cost variance $120 U Direct materials efficiency variance 600 F Direct labor cost variance 850 F Direct labor efficiency variance 5,550 F Variable overhead cost variance 1,400 U Variable overhead efficiency variance 1,400 F Fixed overhead cost variance 1,000 U Fixed overhead volume variance 2,600 F
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Topic Video
Question
Begin by journalizing the purchase of direct materials on account, including the related variance. (Prepare a single compound journal entry.)
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Standards:
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3 yards of cloth per unit at $1.00 per yard
|
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2 direct labor hours per unit at $18.50 per hour
|
|
|
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Actual:
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2,400 yards of cloth were purchased at $1.05 per yard
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Employees worked 1,700 hours and were paid $18.00 per hour
|
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Actual variable overhead was $3,800
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Actual fixed overhead was $6,600
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Data Table
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Direct materials cost variance
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$120 U
|
|---|---|
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Direct materials efficiency variance
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600 F
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|
Direct labor cost variance
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850 F
|
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Direct labor efficiency variance
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5,550 F
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Variable overhead cost variance
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1,400 U
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Variable overhead efficiency variance
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1,400 F
|
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Fixed overhead cost variance
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1,000 U
|
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Fixed overhead volume variance
|
2,600 F
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