Aquella Company produces towels for hotels. The following standards to produce a large towel have been...

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Accounting

Aquella Company produces towels for hotels. The followingstandards to produce a large towel have been established:
Direct materials (2.2 kilograms @ $6.30)
$13.86
Direct labour (1.5 hour @ $16.60)
$24.90
Standard prime cost for each large towel
$38.76
During the year, 72 000 kilograms of material were purchased andused for manufacturing 30 000 large towels, with the followingactual prime costs:
Direct materials
$436 000
Direct labour
$775 770 (for 44 900 hours)
Required:
i. Compute the material and labor price and efficiencyvariances. Indicate if the variance is favorable (F) or unfavorable(U).
Prepare the journal entry for the purchase of rawmaterials.
Prepare the journal entry for the issuance of rawmaterials.
Prepare the journal entry for the closing of material variancesto Cost of Goods Sold.

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3.8 Ratings (649 Votes)

Std qty 2230000 66000 Std price 630 Actual qty 72000 Actual price 43600072000 606 Material price variance Actual qtyStd price Actual material cost 72000630 436000 17600 Fva See Answer

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Direct materials (2.2 kilograms @ $6.30)	$13.86
Direct labour (1.5 hour @ $16.60)	$24.90
Standard prime cost for each large towel	$38.76

Direct materials	$436 000
Direct labour	$775 770 (for 44 900 hours)