The Fantastic Tool Company (Mexico Division) Produced 100,000 Saw Blades

Multiple Choice

The Fantastic Tool Company (Mexico Division) produced 100,000 saw blades during the year. Each saw blade required two hours of labour at a rate of $5.50 per hour. However, the company's standard labour rate is $5.00. Its labour efficiency variance was a favourable $55,000.
-Refer to the Figure.What is the journal entry to record both labour variances?

A) Work in Process 1,055,000Labour Rate Variance 100,000Labour Efficiency Variance 55,000Accrued Payroll 1,100,000
B) Work in Process 1,055,000Labour Rate Variance 105,500Labour Efficiency Variance 55,000Accrued Payroll 1,105,500
C) Work in Process 1,055,000Labour Rate Variance 96,875Labour Efficiency Variance 55,000Accrued Payroll 1,096,875
D) Work in Process 1,055,000Labour Rate Variance 95,000Labour Efficiency Variance 55,000Accrued Payroll 1,095,000