In: Accounting
Recording Standards in Accounts
The Assembly Department produced 2,000 units of product during March. Each unit required 1.5 standard direct labor hours. There were 3,200 actual hours used in the Assembly Department during March at an actual rate of $13.5 per hour. The standard direct labor rate is $14.5 per hour.
Assuming direct labor for a month is paid on the fifth day of the following month, journalize the direct labor in the Assembly Department on March 31. For a compound transaction, if an amount box does not require an entry, leave it blank.
March 31 | |||
Direct Labor Rate Variance | |||
Direct Labor Rate Variance | |||
Wages Payable |
Standard hours = 2000 actual units x 1.5 standard labor hours per unit = 3,000 hours (SH)
Labor Rate Variance |
||||||
( |
Standard Rate |
- |
Actual Rate |
) |
x |
Actual Labor Hours |
( |
$ 14.50 |
- |
$ 13.50 |
) |
x |
3200 |
3200 |
||||||
Variance |
$ 3,200.00 |
Favourable-F |
||||
Labour Efficiency Variance |
||||||
( |
Standard Hours |
- |
Actual Hours |
) |
x |
Standard Rate |
( |
3000 |
- |
3200 |
) |
x |
$ 14.50 |
-2900 |
||||||
Variance |
$ 2,900.00 |
Unfavourable-U |
Date |
Accounts |
Debit |
Credit |
Working |
|
March 31 |
Work in Process |
$ 43,500 |
= Standard cost = 2000 units x 1.5 standard hours x $ 14.5 per standard hours = 43500 |
||
Direct Labor Efficiency Variance |
$ 2,900 |
=calculated above |
|||
Direct Labor Rate Variance |
$ 3,200 |
=calculated above |
|||
Wages Payable |
$ 43,200 |
= Actual cost = 3200 hours x $ 13.5 per actual hours |