PROBLEM 9B–4A Comprehensive Variance Analysis with Incomplete Data; Journal Entries [LO2, LO3, LO4, LO6]

Maple Products, Ltd., manufactures a super-strong hockey stick. The standard cost of one hockey stick is:

Standard Quantity Standard Price Standard or Hours or Rate Cost Direct materials .................................... ? feet $3.00 per foot $ ?

Direct labor .......................................... 2 hours ? per hour ?

Variable manufacturing overhead ........ ? hours $1.30 per hour ?

Total standard cost .............................. $27.00 Last year, 8,000 hockey sticks were produced and sold. Selected cost data relating to last year’s operations follow:

Dr. Cr.

Accounts payable—direct materials purchased (60,000 feet) .......... $174,000 Wages payable (? hours) ................................................................. $79,200*

Work in process—direct materials .................................................... $115,200 Direct labor rate variance ................................................................. $3,300 Variable overhead efficiency variance .............................................. $650

*Relates to the actual direct labor cost for the year.

The following additional information is available for last year’s operations:

a. No materials were on hand at the start of last year. Some of the materials purchased during the year were still on hand in the warehouse at the end of the year.

b. The variable manufacturing overhead rate is based on direct labor-hours. Total actual variable manufacturing overhead cost for last year was $19,800.

c. Actual direct materials usage for last year exceeded the standard by 0.2 feet per stick.
Required:
1. For direct materials:

a. Compute the price and quantity variances for last year.

b. Prepare journal entries to record all activities relating to direct materials for last year.
2. For direct labor:

a. Using the rate variance given on the prior page, calculate the standard hourly wage rate and compute the efficiency variance for last year.

b. Prepare a journal entry to record activity relating to direct labor for last year.
3. Compute the variable overhead rate variance for last year and verify the variable overhead efficiency variance given on the prior page.
4. State possible causes of each variance that you have computed.
5. Prepare a standard cost card for one hockey stick.