Question

Dash Company adopted a standard costing system several years ago. The standard costs for the prime costs (i.e., direct materials and direct labor) of its single product are:

Material	(5 kilograms × $6.00 per kilogram)	$	30.00
Labor	(6 hours × $18.50 per hour)		111.00

All materials are added at the beginning of processing. The following data were taken from the company’s records for November:

In-process beginning inventory	None
In-process ending inventory	760 units, 75% complete as to direct labor
Units completed	5,800 units
Budgeted output	6,200 units
Purchases of materials	52,000 kilograms
Total actual direct labor costs	$620,000
Actual direct labor hours	36,700 hours
Materials usage variance	$1,800 Unfavorable
Total materials variance	$760 Unfavorable

Required:

1. Compute for November:

a. The direct labor efficiency variance. Is this variance favorable (F) or unfavorable (U)?

b. The direct labor rate variance. Is this variance favorable (F) or unfavorable (U)?

c. The actual number of kilograms of material used in the production process during the month.

d. The actual price paid per kilogram of material during the month, the company calculates the direct materials price variance at point of purchase.

e. The amount of direct materials cost and direct labor cost transferred to the Finished Goods Inventory account.

f. The total amount of direct materials cost and direct labor cost in the Work-in-Process Inventory account at the end of the month.

2. Prepare journal entries to record all transactions, including the variances in requirement 1. ANSWER USING FOLLOWING INFORMATION:

• Record the entry for the purchase of 52,000 kilograms of materials.
• Record the entry for the issue of materials to production.
• Record the entry for direct labor wages and standard direct labor cost incurred for manufacture.

REQUIREMENT 1 ANSWERED BELOW:

a. Direct labor efficiency variance $28,120 Favorable b. Direct labor rate variance $58,950 Favorable c. Actual number of kilograms 33,100 kg. d. Actual price paid per kilogram of material $5.980 e. Amount transferred to the finished goods Inventory account $817,800 f. Ending inventory at standard cost $86,070

***REQUIREMENT 1 IS ANSWERED, ANSWERS PROVIDED RIGHT ABOVE. I NEED TO FIGURE OUT HOW TO DO REQUIREMENT 2. THANK YOU!! ***

Answer 1

Particulars	Debit	Credit
Materials Inventory	3,10,960
Material Purchase Price Variance		2,560
Accounts Payable		3,08,400
Work-in-Process Inventory	1,96,800
Materials Usage Variance		1,138
Materials Inventory		1,97,938
Work-in-Process Inventory	7,07,070
Labor Rate Variance		58,950
Labor Efficiency Variance		28,120
Accrued payroll		6,20,000