Zoller Company produces a dark chocolate candy bar. Recently, the company adopted the fol-lowing standards for one bar of the candy: Direct materials (6.3 oz. @ $0.20) $1.26Direct labor (0.08 hr. @ $18.00) 1.44Standard prime cost $2.70 During the first week of operation, the company experienced the following actual results:a. Bars produced: 143,000.b. Ounces of direct materials purchased: 901,200 ounces at $0.21 per ounce.c. There are no beginning or ending inventories of direct materials.d. Direct labor: 11,300 hours at $17.30.Required:1. Compute price and usage variances for direct materials.2. Compute the rate variance and the efficiency variance for direct labor.3. Prepare the journal entries associated with direct materials and direct labor.
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.
Zoller Company produces a dark chocolate candy bar. Recently, the company adopted the fol-
lowing standards for one bar of the candy:
Direct materials (6.3 oz. @ $0.20) $1.26
Direct labor (0.08 hr. @ $18.00) 1.44
Standard prime cost $2.70
During the first week of operation, the company experienced the following actual results:
a. Bars produced: 143,000.
b. Ounces of direct materials purchased: 901,200 ounces at $0.21 per ounce.
c. There are no beginning or ending inventories of direct materials.
d. Direct labor: 11,300 hours at $17.30.
Required:
1. Compute price and usage variances for direct materials.
2. Compute the rate variance and the efficiency variance for direct labor.
3. Prepare the
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