The following information pertains to Nell Company’s production of one unit of its manufactured product during the month of June. The company recognizes the materials price variance when materials are purchased.

Standard quantity of materials ................. 5 lbs

Standard cost per pound ................... $0.20

Standard direct labor hours ................. 0.4

Standard wage rate per hour .................. $7.00

Direct materials purchased ..................100,000 lbs

Cost of direct materials purchased per pound .......... $0.17

Direct materials consumed for manufacture of 10,000 units .... 60,000 lbs

Actual direct labor hours required for 10,000 units ........ 3,900

Actual direct labor cost per hour ................ $7.20

REQUIRED

A. Calculate the price and efficiency (quantity) variances for materials and labor.

B. Record the journal entries for purchase and use of direct materials and the journal entries for direct labor.