Howard Company Has Established the Following Standards

question 42

Essay

Howard Company has established the following standards:
Direct materials: 2.0 pounds at $4.10
Direct labor: 1.5 hours at $7 per hour
Additional information was extracted from the accounting records:
Actual production: 32,000 completed units
Direct materials purchased: 70,000 pounds at $3.82, or $267,400
Direct materials consumed: 65,000 pounds
Actual labor incurred: 51,000 hours at $6.30, or $321,300
Direct-labor rate variance: $35,700 favorable
Direct-labor efficiency variance: $21,000 unfavorable
Assume that the company computes variances at the earliest point in time.
Required:
A. What is the amount of Direct Material Purchase Price Variance?
B. Prepare the journal entry to record the usage of direct materials.
C. Prepare the journal entry to record the incurrence of direct labor costs.

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Definitions:

Gusset

A triangular piece of metal used to reinforce or strengthen a joint in structures or in components like bicycle frames.

Tempered Frame Rails

Tempered Frame Rails are treated through tempering, a heat treatment process to increase the toughness of steel used in the frame rails of vehicles, enhancing strength and durability.

Extend Frame

The process or modification of increasing the length of a vehicle's frame or chassis for additional capacity or functionality.

Degrees

A unit of measurement for angles or temperature.