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In: Accounting

Eagle Company uses a standard cost system that has provided the following data: Units of output...

Eagle Company uses a standard cost system that has provided the following data:

Units of output manufactured: 85
Direct labor:
Standard hours allowed: 2 hours per unit of product
Standard wage rate: $16.10 per hour
Actual direct labor: 190

hours, total cost of $3,439

A. The direct labor rate variance for the period was:

B. The direct labor efficiency variance for the period was:

C. The journal entry to record the cost of direct labor used in this period includes:

Solutions

Expert Solution

A)
Direct Labor rate variance = (Standard rate-Actual rate)*Actual labor hours
= (16.10-18.10)*190
= 380 Unfavorable
Working:
Actual Labor rate = Actual Direct Labor costs/Actual direct labor hours
= $      3,439 /         190
= $      18.10
B)
Labor Efficiency variance = (Standard hours-Actual hours)*Standad labor rate
= (170-190)*16.10
= 322 Unfavorable
Working:
Standard Labor hours = Units of output*standard labor hours per unit
= 85*2
= 170
C)
Journal Entry will include:
Accounts Titles Debit Credit
Work in Process $     2,737
Labor rate Variance           380
Labor efficicnecy Variance           322
Wages Payable       3,439
(To record variance adjustments)
Working:
Standard Cost = 85 x 2 x $ 16.10 = $     2,737

ekkarill92 answered 3 years ago
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