Amada Company’s standard cost system reports this information from its December operations.

Required

1. Prepare December 31 journal entries to record the company’s costs and variances for the month for

(a) Direct materials, 

(b) Direct labor, and 

(c) Overhead. Ignore the journal entry to close the variances.

Analysis Component

2. If management investigates all variances above $5,000, which variances will management investigate?

Transcribed Image Text:

Standard direct materials cost.... $100,000 Direct materials quantity variance 3,000 U Direct materials price variance 500 F Actual direct labor cost...... 90,000 Direct labor efficiency variance 7,000 F Direct labor rate variance .. 1,200 U Actual overhead cost .. 375,000 Volume variance 12,000 U Controllable variance 9,000 U ...