Question

Exercise 25-22 Levine Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product.
Direct materials (8 pounds at $2.50 per pound) $20
Direct labor (3 hours at $12.00 per hour) $36
During the month of April, the company manufactures 230 units and incurs the following actual costs.
Direct materials purchased and used (1,900 pounds) $5,035
Direct labor (700 hours) $8,120
Journalize the entries to record the materials and labor variances.

Answer 1

Answer:

Direct materials   4750 DEBIT

Materials Price Variance   285 DEBIT

Account Payable       5035 CREDIT

WIP  4600   DEBIT

Materials Efficiency Variance 150  DEBIT

    Direct Materials   4750 CREDIT

WIP 8280 DEBIT

Labor Efficiency 120 DEBIT

Wages Payable 8,120 CREDIT

Labor Rate Variance 280 CREDIT

Explanation:

230 production

Direct Materials

Quantity

(units x std quantity - actual quantity) x std rate

(230 x 8 - 1,900) x 2.50 = -150

Price

actual pounds x std rate - actual cost

1900 x 2.5 - 5,035 -  = -285

Total variance 435U

Direct Labor

Efficiency

(Standard rate x units - actual hours) x standard rate

(230 x 3 - 700) x 12 = -120

Rate

Actual hours x rate - Actual Labor cost

700 x 12 - 8,120 = 280

Total 260F