Chapter 9, Problem 20E

Jameson Company produces paper towels. The company has established the following direct materials and direct labor standards for one case of paper towels:

During the first quarter of the year, Jameson produced 45,000 cases of paper towels. The company purchased and used 135,700 pounds of paper pulp at $0.38 per pound. Actual direct labor used was 91,000 hours at $12.10 per hour.

Required:

1. 1. Calculate the direct materials price and usage variances.
2. 2. Calculate the direct labor rate and efficiency variances.
3. 3. Prepare the journal entries for the direct materials and direct labor variances.
4. 4. Describe how flexible budgeting variances relate to the direct materials and direct labor variances computed in Requirements 1 and 2.