Question - The normal capacity of the Malloy Company is 20,000 direct labor hours and 10,000 units per month. A finished unit requires 15 pounds of materials at an estimated cost of $1.00 per pound. The estimated cost of labor is $12.00 per hour. It is estimated that overhead for a month will be $15,000.
During the month of June, 19,000 direct labor hours were worked at an average rate of $11.50 an hour. The number of units produced was 9,000, using 132,000 pounds of material at a cost of $1.05 per pound.
a. Prepare a standard cost summary showing the standard unit cost.
b. Calculate the material and labor variances.
c. Prepare entries in general journal form to charge materials and labor to work in process. Indicate whether the variances are favorable or unfavorable.