Berner Company produces a dark chocolate candy bar. Recently, the company adopted the following standards for one bar of the candy: Direct materials (8.30 oz. @ $0.09) $0.75 Direct labor (0.09 hr. @ $18.00) 1.62 Standard prime cost $2.37 During the first week of operation, the company experienced the following actual results: Bars produced: 144,000. Ounces of direct materials purchased: 1,195,500 ounces at $0.08 per ounce. There are no beginning or ending inventories of direct materials. Direct labor: 12,820 hours at $17.30. Required: Instructions for parts 1 and 2: If a variance is zero, enter "0" and select "Not applicable" from the drop down box. 1. Compute price and usage variances for direct materials. Materials Price Variance $_______ Favorable Materials Usage Variance $______ Unfavorable 2. Compute the rate variance and the efficiency variance for direct labor. Labor Rate Variance $______ Favorable Labor Efficiency Variance $_____ Favorable 3. Prepare the journal entries associated with direct materials and direct labor. If an amount box does not require an entry, leave it blank. Materials _____ ____ Direct Materials Price Variance _____ ____ Accounts Payable ____ ____ Record purchase of materials Work in Process ____ ______ Direct Materials Usage Variance ____ _____ Materials _____ _____ Record usage of materials Work in Process ______ _____ Direct Labor Rate Variance _____ _____ Direct Labor Efficiency Variance _____ _____ Wages Payable _______ ____ Record labor variances
Berner Company produces a dark chocolate candy bar. Recently, the company adopted the following standards for one bar of the candy: Direct materials (8.30 oz. @ $0.09) $0.75 Direct labor (0.09 hr. @ $18.00) 1.62 Standard prime cost $2.37 During the first week of operation, the company experienced the following actual results: Bars produced: 144,000. Ounces of direct materials purchased: 1,195,500 ounces at $0.08 per ounce. There are no beginning or ending inventories of direct materials. Direct labor: 12,820 hours at $17.30. Required: Instructions for parts 1 and 2: If a variance is zero, enter "0" and select "Not applicable" from the drop down box. 1. Compute price and usage variances for direct materials. Materials Price Variance $_______ Favorable Materials Usage Variance $______ Unfavorable 2. Compute the rate variance and the efficiency variance for direct labor. Labor Rate Variance $______ Favorable Labor Efficiency Variance $_____ Favorable 3. Prepare the journal entries associated with direct materials and direct labor. If an amount box does not require an entry, leave it blank. Materials _____ ____ Direct Materials Price Variance _____ ____ Accounts Payable ____ ____ Record purchase of materials Work in Process ____ ______ Direct Materials Usage Variance ____ _____ Materials _____ _____ Record usage of materials Work in Process ______ _____ Direct Labor Rate Variance _____ _____ Direct Labor Efficiency Variance _____ _____ Wages Payable _______ ____ Record labor variances
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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
Berner Company produces a dark chocolate candy bar. Recently, the company adopted the following standards for one bar of the candy:
| Direct materials (8.30 oz. @ $0.09) | $0.75 |
| Direct labor (0.09 hr. @ $18.00) | 1.62 |
| $2.37 |
During the first week of operation, the company experienced the following actual results:
- Bars produced: 144,000.
- Ounces of direct materials purchased: 1,195,500 ounces at $0.08 per ounce.
- There are no beginning or ending inventories of direct materials.
- Direct labor: 12,820 hours at $17.30.
Required:
Instructions for parts 1 and 2: If a variance is zero, enter "0" and select "Not applicable" from the drop down box.
1. Compute price and usage variances for direct materials.
| Materials Price Variance | $_______ |
Favorable
|
| Materials Usage Variance | $______ |
Unfavorable
|
2. Compute the rate variance and the efficiency variance for direct labor.
| Labor Rate Variance | $______ |
Favorable
|
| Labor Efficiency Variance | $_____ |
Favorable
|
3. Prepare the
| Materials |
_____
|
____ |
| Direct Materials Price Variance |
_____
|
____ |
| Accounts Payable |
____
|
____ |
| Record purchase of materials | ||
| Work in Process |
____
|
______ |
| Direct Materials Usage Variance |
____
|
_____ |
| Materials |
_____
|
_____ |
| Record usage of materials | ||
| Work in Process |
______
|
_____ |
| Direct Labor Rate Variance |
_____
|
_____ |
| Direct Labor Efficiency Variance |
_____
|
_____ |
| Wages Payable |
_______
|
____ |
| Record labor variances | _____ | _____ |
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education