Genola Fashions, a U.S. company, began production of a new product on June 1. The company uses a standard costing system, establishing the following standards for one unit of the new product:

During June, the following activity was recorded relative to the new product:

a. Purchasing acquired 30,000 feet of material at a cost of $4.60 per foot.

b. Production used 24,000 feet of the material to manufacture 3,000 units of the new product.

c. Production reported 5,000 hours of labour time worked directly on the new product; the cost of this labour time was $43,000.

Required:

1. For materials:

a. Compute the direct materials price and quantity variances.

b. Prepare journal entries to record the purchase of materials and the use of materials in production.

2. For direct labour:

a. Compute the direct labour rate and efficiency variances.

b. Prepare a journal entry to record the incurrence of direct labour cost for the month.

3. Post the entries you have prepared to the following T-accounts:

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$5 per foot $8 per hour Direct materials 7.0 feet $35.00 1.6 hours Direct labour $12.80 Raw Materials Bal. ? Materials Price Variance Materials Quantity Variance Work in Process Materials used Labour cost Accounts Payable 138,000 Wage Payable 43,000 Labour Variances