Figure 10-9

Multiple Choice

Figure 10-9. James Company manufactures t-shirts.During the year,it manufactured 250,000 t-shirts,using 2 hours of direct labor at a rate of $8.50 per hour.The materials and labor standards for manufacturing the t-shirts are:
It took James 1,400,000 yards at $2.50 per yard to make the 250,000 t-shirts.
Refer to Figure 10-9.What is the entry to close the variances of labor and materials?

A) Materials Price Variance 700,000 Materials Usage Variance 300,000
Labor Efficiency Variance 800,000
Cost of Goods Sold 1,800,000
Cost of Goods Sold 250,000
Labor Rate Variance 250,000
B) Materials Price Variance 750,000 Materials Usage Variance 250,000
Labor Efficiency Variance 850,000
Cost of Goods Sold 1,850,000
Cost of Goods Sold 300,000
Labor Rate Variance 300,000
C) Cost of Goods Sold 1,800,000 Materials Price Variance 700,000
Materials Usage Variance 300,000
Labor Efficiency Variance 800,000
Labor Rate Variance 250,000
Cost of Goods Sold 250,000
D) Cost of Goods Sold 1,850,000 Materials Price Variance 750,000
Materials Usage Variance 250,000
Labor Efficiency Variance 850,000
Labor Rate Variance 300,000
Cost of Goods Sold 300,000