Azim Shirts Inc. manufactures sweatshirts for large stores. The standard costs for a dozen sweatshirts are:

Direct materials 24m × $1.10 per metre = $26.40

Direct labour 3 hours × $7.35 per hour = $22.05

During February, Azim worked on three separate orders of sweatshirts. Job cost records for the month disclose the following:

You have been able to gather the following information:
1. Azim purchased 95,000 m of material during February at a cost of $106,400. The material price variance is recorded when goods are purchased, and all inventories are carried at standard cost.

2. The payroll department reported that production employees were paid $7.50 per hour.

3. There was no beginning work in process. During February, lots 4503 and 4504 were completed, and all materials were issued for lot 4505, which was 80% complete in terms of labour.
Instructions

(a) Calculate the material price variance and make the appropriate journal entry.

(b) Calculate the remaining relevant variances for total production.

(c) Prepare journal entries to charge materials and labour to production.

Transcribed Image Text:

Lot 4503 4504 4505 Units in Lot 1,000 dozen 1,700 dozer 1,200 dozern Materials Used 24,100 m 40,440 m 28,825 m Hours Worked 2,980 5,130 2,890