ABC Company produces a chemical. At the start of the year, they had the following cost information:

Direct material: (10 pounds @ $1.60)	$16.00
Direct labor: (0.75 hours @ $18.00)	$13.50
Variable overhead: (0.75 @ $4.00)	$3.00
Fixed overhead: (0.75 @ $3.00)	$2.25
Standard cost per unit	$34.75

ABC Company computes its overhead rates using practical volume, which is 72,000 units. The actual results are as follows:

a. Units produced: 70,000.

b. Direct materials purchased: 744,000 pounds @ $1.50 per pound.

c.   Direct materials used: 736,000 pounds.

d. Direct labor: 56,000 hours @ $17.90 per hour.

e. Fixed overhead: $214,000

f.   Variable overhead: $175,400

Required: You must show all your calculations for question 1 (below) to get credit.

1). Calculate all the following variances:

a. Direct materials price and efficiency variances.

b. Direct labor price and efficiency variances.

c.   Variable overhead price and efficiency variances.

d. Fixed overhead price and efficiency variances.

2). Record all the necessary journal entries for:

a. Materials purchases.

b. Materials used in production.

c.   Direct labor costs incurred in production.

d. Actual variable overhead costs incurred.

e. Variable overhead costs applied.

f.   Actual fixed overhead costs incurred.

g. Fixed overhead costs applied.

h. Recognition of variable overhead variances.

i.    Recognition of fixed overhead variances.

j.    Closing of all the variance accounts

Answer rating: 100% (QA)

Solution 1 Calculate the variances a Direct materials price and efficiency variances Direct materials price Variance Standard Price of Material Actual ... View the full answer