Genola Fashions began production of a new product on June 1. The company uses a standard cost system and has established the following standards for one unit of the new product:
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 journal entry to record the incurrence of direct labor cost for the month.
3. Post the entries you have prepared to the following T accounts:
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