Metal Products Ltd. began production of a new product on April1. The company uses a standard cost system and has established the following standards for one unit of the new product. During April, the following activity was recorded regarding the new product:
Standard quantity or hours
Standard price or rate
$ 6 per metres
$10 per hour
$4 Purchased 7,000 metres of materials at a cost of $5.75 per metre. Used 6,000 metres of materials to produce 1,500 units of the new product. Worked 725 direct labour-hours on the new product at a cost of $8,120.
Required: Compute direct materials price and quantity variances and pass journal entries to record the purchase of materials and the use of materials in production. Compute the direct labour rate and efficiency variances and prepare journal entries to record the incurrence of direct labour cost for the month.