Direct materials: 25 pounds of CWhiz-2000 @ $0.08/lb. =
Direct labor: 0.05 hour @ $32.00/hr. =
The company manufactured 100,000 bags of Cheese-Be-Good in December and used 2,700,000 pounds of CWhiz-2000 and
5,200 direct labor hours. During the month, the company purchased 3,000,000 lbs. of CWhiz-2000 at $0.075 per pound, and
incurred a total payroll of $182,000 for direct labor. The company records purchases at standard cost and therefore recognizes
material price variances at point of purchase.
1) Compute the price and usage variances for direct materials, and the rate and efficiency variances for direct labor for the
month of December. Round all four answers to nearest dollar.
2) Prepare journal entries (noted below) to record the preceding events for December. Assume materials are paid on account
during the month of purchase and settled the following month.
i) Purchase of Direct Materials
ii) Issuance of Direct Materials to production
ii) Direct Labour cost for the period
A journal entry is an act of keeping or making records of any transactions either economic or non-economic. Transactions are listed in an accounting journal that shows a company\'s debit and credit balances. The journal entry can consist of several recordings, each of which is either a debit or a credit