Question

XYZ Corporation manufactures rafts for use in swimming pools. The standard cost for material and labor is $89.20 per raft. This includes 8 kilograms of direct material at a standard cost of $5.00 per kilogram, and 6 hours of direct labor at $8.20 per hour. The following data pertain to November:

• Work-in-process inventory on November 1: none.

RM inventory on November 1: 2,000 kilograms for $10,040

• Work-in-process inventory on November 30: 800 units (75 percent complete as to labor; material is issued at the beginning of processing).

• Units completed: 5,600 units.

Units sold: 5,400 units

• Purchases of materials: 50,000 kilograms for $249,250.

• Total actual labor costs: $300,760.

• Actual hours of labor: 36,500 hours.

• Direct-material quantity variance: $ 1,500 unfavorable.

Required:

1. Compute the following amounts. Indicate whether each variance is favorable or unfavorable.

a. Direct-labor rate variance for November.

b. Direct-labor efficiency variance for November.

c. Actual kilograms of material used in the production process during November.

d. Actual price paid per kilogram of direct material in November.

e. Total amounts of direct-material and direct-labor cost transferred to Finished-Goods Inventory during November.

f. The total amount of direct-material and direct-labor cost in the ending balance of Work-in-Process Inventory at the end of November.

2. Prepare journal entries to record the following:

• Purchase of raw material.

• Adding direct material to Work-in-Process Inventory.

• Adding direct labor to Work-in-Process Inventory.

• Recording of variances.

Answer 1

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