FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Genola Fashions began production of a new product on June 1. The company uses a
and has established the following standards for one unit of the new product:
Standard Quantity Standard Price Standard
or Hours or Rate Cost
Direct materials .......... 2.5 yards $14 per yard $35.00
Direct labor ................ 1.6 hours $8 per hour $12.80
During June, the following activity was recorded regarding the new product:
a. Purchasing acquired 10,000 yards of material at a cost of $13.80 per yard.
b. Production used 8,000 yards of the material to manufacture 3,000 units of the new product.
c. Production reported that 5,000 direct labor-hours were worked on the new product at a cost of
$43,000.
Required:
1. For direct 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 labor:
a. Compute the direct labor rate and efficiency variances.
b. Prepare a
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