Exam 15: Journal Entries to Record Variances

Pinkney Corporation has provided the following data concerning its direct labor costs for November: Required: Prepare the journal entry to record the incurrence of direct labor costs.

If the actual quantity of materials used is less than the standard quantity of materials allowed for the actual output, then the journal entry to record the Direct Materials Quantity Variance would be a debit.

Compound B73G is used to make Vasconcellos Corporation's major product. The standard cost of B73G is $27.60 per ounce and the standard quantity is 8.6 ounces per unit of output. In the most recent month, 3,200 ounces of the raw material were purchased at a cost of $26.70 per ounce. When recording the purchase of materials, Raw Materials would be:

If the actual rate per direct labor-hour exceeds the standard rate per direct labor-hour, then the journal entry to record the Labor Rate Variance would be a debit.

When the actual amount of a raw material used in production is greater than the standard amount allowed for the actual output, the journal entry would include:

Cafferty Corporation has provided the following data concerning its direct labor costs for March: The Labor Efficiency Variance for March would be recorded as a:

Compound C65Z is used by Sinkey Corporation to make one of its products. The standard cost of compound C65Z is $21.10 per ounce and the standard quantity is 2.0 ounces per unit of output. Data concerning the compound in the most recent month appear below: The raw material was purchased on account. Required: a. Record the purchase of the raw material in a journal entry. b. Record the use of the raw material in production in a journal entry.

The direct labor standards at Hebden Corporation are $10.30 per direct labor-hour (DLH) and 3.4 DLHs per unit of output. In December, 7,800 units were produced, the actual wage rate was $9.90 per DLH, and the actual hours were 21,340 DLHs. Required: Prepare the journal entry to record the incurrence of direct labor costs.

An unfavorable materials price variance is recorded as a debit in the Materials Price Variance account.

Widman, Inc. makes and sells only one product and uses standard costing. The standard cost sheet for one unit of product includes the following: • Direct materials: 5 grams at $0.35 per gram • Direct labor: 1 hour at $8 per hour Last period the company had the following results: • 5,000 grams of direct materials purchased at $0.40 per gram • 4,000 grams of direct materials used in production • 900 units of product were made • 850 hours of direct labor were used at $8.50 per hour The journal entry to record the purchase of direct materials last period would include:

When the actual direct labor-hours exceeds the standard direct labor-hours allowed for the actual output of the period, the journal entry would include:

Miolen Corporation has provided the following data concerning its direct labor costs for June: The Labor Efficiency Variance for June would be recorded as a:

When the actual wage rate paid to direct labor workers exceeds the standard wage rate, the journal entry would include:

Liukko Corporation's standard wage rate is $14.90 per direct labor-hour (DLH) and according to the standards, each unit of output requires 2.8 DLHs. In June, 1,800 units were produced, the actual wage rate was $15.80 per DLH, and the actual hours were 5,110 DLHs. The Labor Efficiency Variance for June would be recorded as a:

The following direct labor standards have been established for product N30A: The following data pertain to the most recent month's operations during which 400 units of product N30A were made: Required: a. What was the labor rate variance for the month? b. What was the labor efficiency variance for the month? c. Prepare a journal entry to record direct labor costs during the month, including the direct labor variances.

Gainer Corporation's standard wage rate is $11.70 per direct labor-hour (DLH) and according to the standards, each unit of output requires 3.9 DLHs. In February, 7,800 units were produced, the actual wage rate was $12.50 per DLH, and the actual hours were 29,940 DLHs. The Labor Rate Variance for February would be recorded as a: