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Recording Standards in Accounts The Assembly Department produced 2,000 units of product during March. Each unit...

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

Solutions

Expert Solution

  • All Working forms part of the answer
  • Calculation of Variances:

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

  • Favourable variances are recorded by crediting them while Unfavourable Variances are recorded by debiting them.
  • Journal Entry would be:

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


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