Question

Direct Materials and Direct Labor Variances

Zoller Company produces a dark chocolate candy bar. Recently, the company adopted the following standards for one bar of the candy:

Direct materials (6.30 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:

1. Bars produced: 145,000.
2. Ounces of direct materials purchased: 913,800 ounces at $0.21 per ounce.
3. There are no beginning or ending inventories of direct materials.
4. Direct labor: 11,460 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	fill in the blank
Materials Usage Variance	fill in the blank

2. Compute the rate variance and the efficiency variance for direct labor.

Labor Rate Variance	$fill in the blank 4deb7dfaef99fda_5
Labor Efficiency Variance	$fill in the blank 4deb7dfaef99fda_7

3. Prepare the journal entries associated with direct materials and direct labor. If an amount box does not require an entry, leave it blank or enter "0".

		fill in the blank f13dc0fb804105b_2	fill in the blank f13dc0fb804105b_3
		fill in the blank f13dc0fb804105b_5	fill in the blank f13dc0fb804105b_6
		fill in the blank f13dc0fb804105b_8	fill in the blank f13dc0fb804105b_9
	Record purchase of materials
		fill in the blank f13dc0fb804105b_11	fill in the blank f13dc0fb804105b_12
		fill in the blank f13dc0fb804105b_14	fill in the blank f13dc0fb804105b_15
		fill in the blank f13dc0fb804105b_17	fill in the blank f13dc0fb804105b_18
	Record usage of materials
		fill in the blank f13dc0fb804105b_20	fill in the blank f13dc0fb804105b_21
		fill in the blank f13dc0fb804105b_23	fill in the blank f13dc0fb804105b_24
		fill in the blank f13dc0fb804105b_26	fill in the blank f13dc0fb804105b_27
		fill in the blank f13dc0fb804105b_29	fill in the blank f13dc0fb804105b_30
	Record labor variances

thank you

Answer 1

1
	Material Price Variance =	(Actual Price - Standard Price) * Actual Quantity
	=	[$0.21 - $0.20] * 913,800.
	=	$9,138	Unfavorable
	Material Efficiency Variance =	(Actual Quantity - Standard Quantity) * Standard Rate
	=	[(913,800 - 913,500] * $0.20
	=	$60	Unfavorable
	Direct labor rate variance =	(Actual Rate - Standard Rate) * Actual hours
	=	($17.30 per hr. - $18.00 per hr.] * 11,460 DLHs
	=	$8,022	Favorable
	Direct labor efficiency variance =	(Actual hours - Standard hours) * Standard Rate
	=	[11,460 - 11,600] * $18.00
	=	$2,520	Favorable
2	Accounts Title	Debit	Credit
	Direct Materials Control	$182,760
	Direct Materials Purchase Price Variance	$9,138
	Accounts Payable Control		$191,898
	Work-in-Process Control	$182,700
	Direct Materials Efficiency Variance	$60
	Direct Materials Control		$182,760
	Work-in-Process Control	$208,800
	Direct Manufacturing Labor Rate Variance		$8,022
	Direct Manufacturing Labor Efficiency Variance		$2,520
	Wages Payable Control		$198,258