Question:
(DM & DL variances; journal entries) Griffon Corp. makes small plastic dog toys with the following material and labor standards:
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Standard Quantity
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Standard Cost
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Material
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0.5 pound
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$4.00 per pound
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Labor
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12 minutes
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9.00 per hour
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During October, 60,000 pounds of material were acquired on account at $4.15 per pound. During October, 50,120 pounds of that were used in production during the month to make 100,000 toys. Factory payroll for October showed 20,600 direct labor hours at a total cost of $182,310.
a. Compute material and labor variances, basing the material price variance on the quantity of material purchased.
b. Assuming a perpetual inventory system is used, prepare the relevant general journal entries for October.