Genola Fashions Began Production Of New Product On June

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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