Question

Trueform Products, Inc., produces a broad line of sports equipment and uses a standard cost system for control purposes. Last year the company produced 4,700 varsity footballs. The standard costs associated with this football, along with the actual costs incurred last year, are given below (per football):

 Standard CostActual Cost  Direct materials:        Standard: 4 feet at $3.40 per foot$13.60              Actual: 4.4 feet at $3.30 per foot $14.52         Direct labor:        Standard: 1.80 hours at $4.20 per hour7.56              Actual: 1.60 hours at $4.90 per hour 7.84         Variable manufacturing overhead:        Standard: 1.80 hours at $1.60 per hour2.88              Actual: 1.60 hours at $2.30 per hour 3.68         Total cost per football
$24.04       
$26.04       
The president was elated when he saw that actual costs exceeded standard costs by only $2.00 per football. He stated, "I was afraid that our unit cost might get out of hand when we gave out those raises last year in order to stimulate output. But it's obvious our costs are well under control."

There was no inventory of materials on hand to start the year. During the year, 20,680 feet of materials were purchased and used in production.
Requirement 1:For direct materials:
(a)
Compute the price and quantity variances for the year. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Omit the "$" sign in your response.)

     Price variance$       (Click to select)FUNone       Quantity variance$       (Click to select)FNoneU     
(b)
Prepare journal entries to record all activity relating to direct materials for the year. (Omit the "$" sign in your response.)

General JournalDebitCredit  (Click to select)Raw materialsAccounts payableWork in processMaterials quantity varianceMaterials price variance           (Click to select)Raw materialsWork in processMaterials price varianceMaterials quantity varianceAccounts payable           (Click to select)Raw materialsMaterials price varianceMaterials quantity varianceWork in processAccounts payable         (Click to select)Accounts payableWork in processMaterials quantity varianceMaterials price varianceRaw materials      (Click to select)Materials price varianceWork in processAccounts payableMaterials quantity varianceRaw materials           (Click to select)Materials quantity varianceRaw materialsAccounts payableWork in processMaterials price variance    Requirement 2:For direct labor:
(a)
Compute the rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Omit the "$" sign in your response.)

     Rate variance$       (Click to select)NoneUF       Efficiency variance$       (Click to select)NoneUF     (b)
Prepare journal entries to record the incurrence of direct labor cost for the period. (Omit the "$" sign in your response.)

General JournalDebitCredit  (Click to select)Work in processLabor efficiency varianceLabor rate varianceAccounts payableWages payable      (Click to select)Accounts payableLabor rate varianceWages payableWork in processLabor efficiency variance           (Click to select)Accounts payableLabor rate varianceLabor efficiency varianceWork in processWages payable           (Click to select)Work in processWages payableLabor efficiency varianceLabor rate varianceAccounts payable    Requirement 3:
Compute the variable overhead rate and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Omit the "$" sign in your response.)

     Variable overhead rate variance$       (Click to select)NoneFU       Variable overhead efficiency variances$       (Click to select)UFNone     

Answer 1

	Truform Products Inc.
	Actual Quantity (AQ)=(4700*4.4)	20680	Feet
	Standard Quantity(SQ)=(4700*4)	18800	Feet
	AP=	$            3.30	per foot
	SP=	$            3.40	per foot
	Material Price Variance=AQ*(AP-SP)
	Material Price Variance=20680*($3.30-$3.40)	$ -2,068.00	(F )
	Material Quantity Variance=SP*(AQ-SQ)
	Material Quantity Variance=$3.4*(20680-18800)	$   6,392.00	(U )
	Journal Entries
	Raw Materials (20680*$3.4)	$ 70,312.00
	To Material Price Variance(20680*.10)		$   2,068.00
	To Accounts Payable(20680*3.3)		$ 68,244.00
	Work in Process(18800*$3.4)	$ 63,920.00
	Material Quantity Variance(1880*$3.4)	$   6,392.00
	To Raw Materials(20680*$3.4)		$ 70,312.00
	Actual Hours(AH)=(4700*1.60)	7520	Hours
	Standard Hours(SH)=(4700*1.80)	8460	Hours
	Actual Rate=	$            4.90	Per Hour
	Standard Rate=	$            4.20	Per Hour
	Labor Rate Variance=AH*(AR-SR)
	Labor Rate Variance=AH*(AR-SR)	$   5,264.00	(U)
	Labor Efficiency Variance=SR*(AH-SH)
	Labor Efficiency Variance=$4.20*(7520-8460)	$ -3,948.00	(F)
	Journal Entries
	Work in Process(8460*$4.20)	$ 35,532.00
	Labor Rate Variance(7520*$.70)	$   5,264.00
	To Labor Efficiency Variance(940*$4.20)		$   3,948.00
	To Wages Payable(7520*$4.90)		$ 36,848.00
	Actual Hours(AH)=(4700*1.60)	7520	Hours
	Standard Hours(SH)=(4700*1.80)	8460	Hours
	Actual Rate	$            2.30	per hours
	Standard Rate	$            1.60	per hours
	Variable Overhead Rate Variance=AH*(AR-SR)
	Variable Overhead Rate Variance=7520*($2.30-$1.60)	$   5,264.00	(U)
	Variable Overhead Efficiency Variance=SR*(AH-SH)
	Variable Overhead Efficiency Variance=$1.60*(7520-8460)	$ -1,504.00	(F)