Figure 10-8

Multiple Choice

Figure 10-8. The Perfect Tool Company (South America Division) produced 80,000 saw blades during the year.It took 1.5 hours of labor per blade at a rate of $8.50 per hour.However,its standard labor rate is $8.00.Its labor efficiency variance was an unfavorable $40,000.
Refer to Figure 10-8.What is the journal entry to record both labor variances?

A) Work In Process 920,000 Labor Rate Variance 60,000
Labor Efficiency Variance 40.000
Accrued Payroll 1,020,000
B) Work In Process 960,000 Labor Rate Variance 57,500
Labor Efficiency Variance 40,000
Accrued Payroll 1,057,500
C) Work In Process 920,000 Labor Rate Variance 60,000
Labor Efficiency Variance 40,000
Accrued Payroll 940,000
D) Work In Process 960,000 Labor Rate Variance 57,500
Labor Efficiency Variance 40,000
Accrued Payroll 977,500