Following are the variances for Caldera Cooking Company for the month of July. 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 (F = favourable and U = unfavourable).

Direct materials price variance..............................................$1,500 F

Direct materials efficiency variance.........................................1,000 F

Labour price variance.................................................................800 U

Labour efficiency variance.......................................................1,500 F

Fixed overhead spending variance.............................................200 U

Variable overhead spending variance......................................1,000 F

Variable overhead efficiency variance.........................................500 F

Caldera Cooking considers anything greater than $3,000 as a material variance. Following are end-of-period inventory balances:

Work in process.....................................................................$ 2,000

Finished goods.........................................................................6,000

Cost of goods sold..................................................................42,000

Required:

A. Determine whether the total variance amount is material.

B. Prepare a journal entry to close the variances at the end of July.