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

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter9: Standard Costing: A Functional-based Control Approach

Section: Chapter Questions

Problem 14E: Zoller Company produces a dark chocolate candy bar. Recently, the company adopted the following...

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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	_____	_____

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