Following are the variances for Fine Products Manufacturing Company for the month of March. Assume that the price variance for direct materials is calculated at the time of purchase and that the amount of direct materials purchased is equal to the amount of direct materials used, with no beginning or ending inventories for direct materials.
Direct materials price variance ..... $2,000 U
Direct materials efficiency variance .... 1,500 F
Labor price variance .......... 5,000 U
Labor efficiency variance ....... 2,000 U
Fixed overhead spending variance ........ 200 U
Variable overhead spending variance ... 1,000 F
Variable overhead efficiency variance .. 1,200 U
Fine Products considers anything greater than $5,000 as a material variance. Following are end-of-period inventory balances.
Work in process .. $ 2,000
Finished goods ... 6,000
COGS ...... 24,000

A. Determine whether the total variance amount is material.
B. Prepare a journal entry to close the variances at the end of March.

  • CreatedJanuary 26, 2015
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