Managerial Accounting: P24-4A Heritage Furniture Co. uses a standard cost system

Managerial Accounting 
Heritage Furniture Co. uses a standard cost system. One of the company's most popular products is an oak entertainment center that looks like an old icebox but houses a television, stereo, or other electronic components. The per-unit standard costs of the entertainment center, assuming a “normal” volume of 1,000 units per month, are as follows: 
Direct materials, 100 board-feel of wood at $1.30 per foot 130.00 
Direct labor, 5 hours at $8.00 per hour 40.00 
Manufacturing overhead (applied at $22 per unit) 
Fixed ($15,000 / 1,000 units of normal production) 15.00 
Variable 7.00 22.00 
Total standard unit cost 192.00 

During July, 800 entertainment centers were scheduled and produced at the following actual unit costs: 
Direct materials, 110 feet at $1.20 per foot 132.00 
Direct labor, 5.5 hours at $7.80 per hour 42.90 
Manufacturing overhead, $18,480 / 800units 23.10 
Total actual unit cost 198.00 

a. Compute the following cost variances for the of July: 
1. Materials price variance 
2. Materials quantity variance 
3. Labor rate variance 
4. Labor efficiency variance 
5. Overhead spending variance 
6. Volume variance 
b. Prepare journal entries to assign manufacturing costs to the work in process Inventory account and to record cost variances for July. Use separate entries for (1) direct materials, (2) direct labor, and (3) overhead costs. 
c. Comment on any significant problem or areas of cost savings revealed by your computation of cost variances. Also comment on any possible causal relationships between significant favorable and unfavorable cost variances.
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