Standard Products Company Recognizes Variances from Standards at the Earliest $\quad$

question 84

Essay

Standard Products Company recognizes variances from standards at the earliest opportunity,
and the quantity of direct materials purchased is equal to the quantity used.The following information is available for the most recent month.Assume the allocation base for fixed overhead costs is the number of units.
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Direct materials Direct Labor }$
$\begin{array}{lll}\text { Standard quantity } / \text { unit } & 6.00 \mathrm{lbs} . & 2.5 \mathrm{hrs} \\\text { Standard price } / \mathrm{lb} \text {. or } \mathrm{hr} . & \$ 8.10 / \mathrm{lb} . & \$ 8.00 / \mathrm{hr} \\\text { Actual quantity } / \text { unit } & 6.25 \mathrm{lbs} . & 2.8 \mathrm{hrs} \text {. } \\\text { Actual price } / 1 \mathrm{~b} \text {. or } \mathrm{hr} \text {. } & \$ 8.00 / 1 \mathrm{~b} \text {. } & \$ 7.50 / \mathrm{hr} \\\text { Price variance } \$ 562.50 \mathrm{~F} & \$ 1,260.00 \mathrm{~F} &\\\text { Efficiency variance }&\$ 1,822.50 \mathrm{U} & \$ 2,160.00 \mathrm{U}\\\\\text { Static budget volume } & 800 \text { units } \\\text { Actual volume } & 900 \text { units } \\\text { Actual overhead cost } & \$ 11,000\\\text {Standard variable overhead cost }& \$ 5 /\text { unit } \\ \text {unit Standard fixed overhead cost} & \$ 5,600 \\\text { Overhead flexible budget variance } & \$ 900 \mathrm{U} \\\text { Production volume variance } & \$ 700 \mathrm{~F} &\end{array}$

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Journalize the direct labor costs incurred and the assignment of direct labor to Work in Process Inventory,including the related variances.

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Definitions:

Inversely Proportional

A relationship between two variables where when one variable increases, the other decreases at a rate that maintains the constant product of the two variables.

Power Source

A component or system that provides electrical power to a circuit or device.

Electrostatic Attraction

The force of attraction between oppositely charged particles.

Inversely

A term describing a relationship between two variables whereby they move in opposite directions; as one increases, the other decreases.