app11b.doc

Appendix 11B, Journal Entries to Record Variances

Question Type

Diff

icu

lty

LO1:

Set

ting

stan

dar

ds

LO2:

Ma

teria

ls v

aria

nces

LO3:

Dire

ct la

bor

varia

nce

s

LO4:

Var

iabl

e ov

erhe

ad v

aria

nces

LO5:

Per

form

ance

mea

sure

s

LO6:

Fix

ed

ove

rhe

ad v

aria

nces

(A

pp 1

1A)

LO7:

Jou

rnal

ent

ries

(App

11B

)

Pro

fess

ion

al E

xam

Ada

pted

ID OriginCMA/CPA origin

1 T/F M x 3/e: 9-12 Authors2 T/F M x 6/e: 9-15 Authors

3Conceptual

M/C M x x EN, 4/19/2003 B1 E.N.

4Conceptual

M/C M x x EN, 4/19/2003 C2 E.N.

5Conceptual

M/C M x x LD9e:CH10Q08 Larry Deppe

6Conceptual

M/C M x x EN, 4/19/2003 F2 E.N.

7Conceptual

M/C M x x EN, 4/19/2003 H1 E.N.

8Conceptual

M/C M x x LD9e:CH10Q09 Larry Deppe

9 M/C E x x9/21/2004 Single MC AQ3 E.N.

10 M/C E x x9/21/2004 Single MC AR3 E.N.

11 M/C E x x9/21/2004 Single MC AS3 E.N.

12 M/C E x x9/21/2004 Single MC AT3 E.N.

11B-1


13 M/C M x x 8/e: ATB10-54 David Keyes

14 M/C E x9/21/2004 Single MC AK3 E.N.

15 M/C E x9/21/2004 Single MC AL3 E.N.

16 M/C E x9/21/2004 Single MC AM3 E.N.

17 M/C E x9/21/2004 Single MC AN3 E.N.

18 M/C E x9/21/2004 Single MC AO3 E.N.

19 M/C E x9/21/2004 Single MC AP3 E.N.

11B-1

20-23 Multipart M/C M x x x 5/e: 9-52 to 56 Authors

11B-2

24-27 Multipart M/C M x x 9/21/2004 Multi MC E3 E.N.

11B-3

28-31 Multipart M/C M x x 9/21/2004 Multi MC F3 E.N.

11B-4

32-34 Multipart M/C M x x 9/21/2004 Multi MC G3 E.N.

11B-5

35-37 Multipart M/C M x x 9/21/2004 Multi MC H3 E.N.38 Problem H x x x x LD9e:CH10P1 Larry Deppe39 Problem M x x EN 4/20/2003 D3 E.N.40 Problem M x x EN 4/21/2003 E3 E.N.

41 Problem E x x9/15/2004 Problem H3 E.N.

42 Problem E x x9/15/2004 Problem I3 E.N.

43 Problem M x x EN 4/21/2003 H3 E.N.44 Problem M x x EN 4/21/2003 I3 E.N.

45 Problem E x x9/21/2004 Problem J3 E.N.

46 Problem E x x9/21/2004 Problem K3 E.N.

11B-2


True / False Questions

1. A favorable labor efficiency variance would result in a credit balance in the labor efficiency variance account. True False

2. A favorable materials quantity variance would appear as a debit in a journal entry. True False

Multiple Choice Questions

3. When the actual price paid on credit for a raw material is less than its standard price, the journal entry would include: A. Debit to Raw Materials; Credit to Materials Price VarianceB. Debit to Accounts Payable; Credit to Materials Price VarianceC. Debit to Raw Materials; Debit to Materials Price VarianceD. Debit to Accounts Payable; Debit to Materials Price Variance

4. When the actual amount of a raw material used in production is less than the standard amount allowed for the actual output, the journal entry would include: A. Debit to Raw Materials; Credit to Materials Quantity VarianceB. Debit to Work-In-Process; Credit to Materials Quantity VarianceC. Debit to Raw Materials; Debit to Materials Quantity VarianceD. Debit to Work-In-Process; Debit to Materials Quantity Variance

11B-3


5. Drake Company purchased materials on account. The entry to record the purchase of materials having a standard cost of $1.50 per pound from a supplier at $1.60 per pound would include a: A. credit to Raw Materials Inventory.B. debit to Work in Process.C. credit to Materials Price Variance.D. debit to Materials Price Variance.

6. When the actual wage rate paid to direct labor workers is less than the standard wage rate, the journal entry would include: A. Credit to Wages Payable; Credit to Labor Rate VarianceB. Credit to Work-In-Process; Credit to Labor Rate VarianceC. Credit to Wages Payable; Debit to Labor Rate VarianceD. Credit to Work-In-Process; Debit to Labor Rate Variance

7. When the actual direct labor-hours are less than the standard direct labor-hours allowed for the actual output of the period, the journal entry would include: A. Credit to Wages Payable; Credit to Labor Efficiency VarianceB. Credit to Work-In-Process; Credit to Labor Efficiency VarianceC. Credit to Wages Payable; Debit to Labor Efficiency VarianceD. Credit to Work-In-Process; Debit to Labor Efficiency Variance

11B-4


8. Which of the following entries would correctly record the charging of direct labor costs to Work in Process given an unfavorable labor efficiency variance and a favorable labor rate variance?

A.

B.

C.

D.

9. Lafaso Corporation has provided the following data concerning its direct labor costs for July:

The Labor Rate Variance for July would be recorded as a: A. credit of $7,014.B. debit of $8,584.C. debit of $7,014.D. credit of $8,584.

11B-5


10. Lemoine Corporation's standard wage rate is $11.50 per direct labor-hour (DLH) and according to the standards, each unit of output requires 5.5 DLHs. In February, 8,900 units were produced, the actual wage rate was $11.60 per DLH, and the actual hours were 51,210 DLHs. The Labor Rate Variance for February would be recorded as a: A. debit of $5,121.B. credit of $4,895.C. credit of $5,121.D. debit of $4,895.

11. Capizzi Corporation has provided the following data concerning its direct labor costs for February:

The Labor Efficiency Variance for February would be recorded as a: A. debit of $45,562.B. credit of $45,562.C. debit of $44,726.D. credit of $44,726.

12. Murdough Corporation's standard wage rate is $10.80 per direct labor-hour (DLH) and according to the standards, each unit of output requires 2.0 DLHs. In February, 1,800 units were produced, the actual wage rate was $9.80 per DLH, and the actual hours were 3,990 DLHs. The Labor Efficiency Variance for February would be recorded as a: A. debit of $4,212.B. credit of $4,212.C. debit of $3,822.D. credit of $3,822.

11B-6


13. Kouba Manufacturing Corporation's actual direct labor cost for the month of July was $45,000. Its labor rate variance for July was $1,000 unfavorable. Its labor efficiency variance was $5,000 favorable. What summary journal entry would Kouba make to record this information?

A.

B.

C.

D.

14. Manikas Corporation has provided the following data concerning its most important raw material, compound V82T:

When recording the purchase of materials, Raw Materials would be: A. debited for $148,920.B. credited for $149,650.C. debited for $149,650.D. credited for $148,920.

11B-7


15. Curd Corporation has provided the following data concerning its most important raw material, compound J33X:

When recording the use of materials in production, Raw Materials would be: A. debited for $41,417.B. credited for $41,417.C. debited for $38,922.D. credited for $38,922.

16. Compound G92N is used to make Passero Corporation's major product. The standard cost of G92N is $28.60 per ounce and the standard quantity is 2.9 ounces per unit of output. In the most recent month, 2,000 ounces of the raw material were purchased at a cost of $29.50 per ounce. When recording the purchase of materials, Raw Materials would be: A. credited for $59,000.B. debited for $57,200.C. credited for $57,200.D. debited for $59,000.

17. Compound V61Z is used to make Rigby Corporation's major product. The standard cost of compound V61Z is $33.60 per ounce and the standard quantity is 5.5 ounces per unit of output. In the most recent month, 3,130 ounces of the compound were used to make 700 units of the output. When recording the use of materials in production, Raw Materials would be: A. credited for $129,360.B. credited for $105,168.C. debited for $105,168.D. debited for $129,360.

11B-8


18. Data concerning the direct labor costs for December of Dimpfl Corporation appear below:

The journal entry to record the incurrence of direct labor costs in December would include the following for Work in Process: A. credit of $296,424.B. debit of $296,424.C. credit of $388,962.D. debit of $388,962.

19. Kirsch Corporation's standard wage rate is $13.40 per direct labor-hour (DLH) and according to the standards, each unit of output requires 8.9 DLHs. In May, 5,000 units were produced, the actual wage rate was $12.80 per DLH, and the actual hours were 41,790 DLHs. In the journal entry to record the incurrence of direct labor costs in May, the Work in Process entry would consist of a: A. debit of $596,300.B. debit of $534,912.C. credit of $534,912.D. credit of $596,300.

11B-9


The Dexon Company makes and sells a single product called a Mip and uses a standard costing system. The following standards have been established for one unit of Mip:

There were no inventories of any kind on August 1. During August, the following events occurred:

Purchased 15,000 board feet at the total cost of $24,000. Used 12,000 board feet to produce 2,100 Mips. Used 1,700 hours of direct labor time at a total cost of $20,060.

20. To record the purchase of direct materials, the general ledger would include what entry to the Materials Price Variance Account? A. $1,500 creditB. $1,500 debitC. $6,000 creditD. $6,000 debit

21. To record the use of direct materials in production, the general ledger would include what entry to the Materials Quantity Variance account? A. $3,600 debitB. $3,600 creditC. $900 debitD. $900 credit

22. To record the incurrence of direct labor cost and its use in production, the general ledger would include what entry to the Labor Rate Variance account? A. $240 creditB. $240 debitC. $340 debitD. $340 credit

11B-10


23. To record the incurrence of direct labor costs and its use in production, the general ledger would include what entry to the Labor Efficiency Variance account? A. $480 creditB. $240 debitC. $1,200 debitD. $1,200 credit

Henifin Corporation has provided the following data concerning its most important raw material, compound K91J:

The raw material was purchased on account.

24. The debits to the Raw Materials account for January would total: A. $39,330B. $21,981C. $19,395D. $38,790

25. The credits to the Raw Materials account for January would total: A. $21,981B. $19,395C. $38,790D. $39,330

11B-11


26. The Materials Price Variance for January would be recorded as a: A. Credit of $540B. Debit of $306C. Credit of $306D. Debit of $540

27. The Materials Quantity Variance for January would be recorded as a: A. Credit of $2,586B. Credit of $16,809C. Debit of $16,809D. Debit of $2,586

Compound C90N is a raw material used to make Mosbarger Corporation's major product. The standard cost of compound C90N is $38.20 per ounce and the standard quantity is 8.0 ounces per unit of output. Data concerning the compound for September appear below:


28. The debits to the Raw Materials account for September would total: A. $41,250B. $30,942C. $30,560D. $42,020

29. The credits to the Raw Materials account for September would total: A. $30,560B. $41,250C. $30,942D. $42,020

11B-12


30. The Materials Price Variance for September would be recorded as a: A. Credit of $567B. Credit of $770C. Debit of $567D. Debit of $770

31. The Materials Quantity Variance for September would be recorded as a: A. Debit of $382B. Credit of $11,078C. Credit of $382D. Debit of $11,078

Castanada Corporation has provided the following data concerning its direct labor costs for August:

32. The journal entry to record the incurrence of direct labor costs in August would include the following for Work in Process: A. Debit of $222,768B. Credit of $264,768C. Credit of $222,768D. Debit of $264,768

33. The Labor Rate Variance for August would be recorded as a: A. Debit of $18,912B. Credit of $18,912C. Credit of $17,136D. Debit of $17,136

11B-13


34. The Labor Efficiency Variance for August would be recorded as a: A. Credit of $24,864B. Debit of $24,864C. Debit of $23,088D. Credit of $23,088

Lian Corporation's standard wage rate is $12.10 per direct labor-hour (DLH) and according to the standards, each unit of output requires 7.1 DLHs. In June, 4,500 units were produced, the actual wage rate was $11.90 per DLH, and the actual hours were 35,930 DLHs.

35. In the journal entry to record the incurrence of direct labor costs in June, the Work in Process entry would consist of a: A. debit of $427,567.B. credit of $427,567.C. debit of $386,595.D. credit of $386,595.

36. The Labor Rate Variance for June would be recorded as a: A. credit of $6,390.B. credit of $7,186.C. debit of $7,186.D. debit of $6,390.

37. The Labor Efficiency Variance for June would be recorded as a: A. debit of $47,362.B. debit of $48,158.C. credit of $48,158.D. credit of $47,362.

11B-14


Essay Questions

38. Vernon Mills, Inc. is a large producer of men's and women's clothing. The company uses standard costs for all of its products. The standard costs and actual costs per unit of product for a recent period are given below for one of the company's product lines:

During this period, the company produced 4,800 units of this product. A comparison of standard and actual costs for the period on a total cost basis is given below:

There was no inventory of materials on hand at the beginning of the period. During the period, 21,120 yards of materials were purchased, all of which were used in production.

Required:

a. For direct materials, compute the price and quantity variances for the period and prepare journal entries to record all activity relating to direct materials for the period.

b. For direct labor, compute the rate and efficiency variances and prepare a journal entry to record the incurrence of direct labor cost for the period.

c. For variable overhead, compute the rate and efficiency variances.

11B-15


39. The following standards have been established for a raw material used in the production of product N70:

The following data pertain to a recent month's operations:

Required:

a. What is the materials price variance for the month?

b. What is the materials quantity variance for the month?

c. Prepare journal entries to record the purchase and use of the raw material during the month. (All raw materials are purchased on account.)

11B-16


40. The standards for product C78 call for 2.0 pounds of a raw material that costs $13.30 per pound. Last month, 5,900 pounds of the raw material were purchased for $74,045. The actual output of the month was 2,640 units of product C78. A total of 5,300 pounds of the raw material were used to produce this output.

Required:


b. What is the materials quantity variance for the month?c. Prepare journal entries to record the purchase and use of the raw material during the month. (All raw materials are purchased on account.)

41. Schinkel Corporation has provided the following data concerning its most important raw material, compound X87C:


Required:

a. Record the purchase of the raw material in a journal entry.

b. Record the use of the raw material in production in a journal entry.

11B-17


42. Compound A39A is used by Ashline Corporation to make one of its products. The standard cost of compound A39A is $32.00 per ounce and the standard quantity is 8.5 per unit of output. Data concerning the compound in the most recent month appear below:


Required:



11B-18


43. The following direct labor standards have been established for product K62G:

The following data pertain to the most recent month's operations during which 3,040 units of product K62G were made:

Required:

a. What was the labor rate variance for the month?

b. What was the labor efficiency variance for the month?c. Prepare a journal entry to record direct labor costs during the month, including the direct labor variances.

44. The standards for product V33I specify 8.0 direct labor-hours per unit at $11.20 per direct labor-hour. Last month 760 units of product V33I were produced using 6,500 direct labor-hours at a total direct labor wage cost of $75,075.

Required:



11B-19


45. Martorella Corporation has provided the following data concerning its direct labor costs for October:

Required:

Prepare the journal entry to record the incurrence of direct labor costs.

46. The direct labor standards at Lounsbury Corporation are $12.50 per direct labor-hour (DLH) and 6.1 DLHs per unit of output. In November, 4,700 units were produced, the actual wage rate was $12.50 per DLH, and the actual hours were 29,570 DLHs.

Required:


11B-20

Appendix 11B, Journal Entries to Record Variances Key

True / False Questions

1. A favorable labor efficiency variance would result in a credit balance in the labor efficiency variance account. TRUE

AACSB: Reflective ThinkingAICPA BB: Critical ThinkingAICPA FN: MeasurementLearning Objective: 7Level: Medium

2. A favorable materials quantity variance would appear as a debit in a journal entry. FALSE

AACSB: Reflective ThinkingAICPA BB: Critical ThinkingAICPA FN: MeasurementLearning Objective: 7Level: Medium

Multiple Choice Questions

3. When the actual price paid on credit for a raw material is less than its standard price, the journal entry would include: A. Debit to Raw Materials; Credit to Materials Price VarianceB. Debit to Accounts Payable; Credit to Materials Price VarianceC. Debit to Raw Materials; Debit to Materials Price VarianceD. Debit to Accounts Payable; Debit to Materials Price Variance

AACSB: Reflective ThinkingAICPA BB: Critical ThinkingAICPA FN: MeasurementLearning Objective: 2Learning Objective: 7Level: Medium

11B-21


4. When the actual amount of a raw material used in production is less than the standard amount allowed for the actual output, the journal entry would include: A. Debit to Raw Materials; Credit to Materials Quantity VarianceB. Debit to Work-In-Process; Credit to Materials Quantity VarianceC. Debit to Raw Materials; Debit to Materials Quantity VarianceD. Debit to Work-In-Process; Debit to Materials Quantity Variance


5. Drake Company purchased materials on account. The entry to record the purchase of materials having a standard cost of $1.50 per pound from a supplier at $1.60 per pound would include a: A. credit to Raw Materials Inventory.B. debit to Work in Process.C. credit to Materials Price Variance.D. debit to Materials Price Variance.


6. When the actual wage rate paid to direct labor workers is less than the standard wage rate, the journal entry would include: A. Credit to Wages Payable; Credit to Labor Rate VarianceB. Credit to Work-In-Process; Credit to Labor Rate VarianceC. Credit to Wages Payable; Debit to Labor Rate VarianceD. Credit to Work-In-Process; Debit to Labor Rate Variance


11B-22


7. When the actual direct labor-hours are less than the standard direct labor-hours allowed for the actual output of the period, the journal entry would include: A. Credit to Wages Payable; Credit to Labor Efficiency VarianceB. Credit to Work-In-Process; Credit to Labor Efficiency VarianceC. Credit to Wages Payable; Debit to Labor Efficiency VarianceD. Credit to Work-In-Process; Debit to Labor Efficiency Variance


8. Which of the following entries would correctly record the charging of direct labor costs to Work in Process given an unfavorable labor efficiency variance and a favorable labor rate variance?

A.

B.

C.

D.


11B-23


9. Lafaso Corporation has provided the following data concerning its direct labor costs for July:

The Labor Rate Variance for July would be recorded as a: A. credit of $7,014.B. debit of $8,584.C. debit of $7,014.D. credit of $8,584.

Labor Rate Variance:

A favorable labor rate variance would be credited.

AACSB: AnalyticAICPA BB: Critical ThinkingAICPA FN: MeasurementLearning Objective: 3Learning Objective: 7Level: Easy

11B-24


10. Lemoine Corporation's standard wage rate is $11.50 per direct labor-hour (DLH) and according to the standards, each unit of output requires 5.5 DLHs. In February, 8,900 units were produced, the actual wage rate was $11.60 per DLH, and the actual hours were 51,210 DLHs. The Labor Rate Variance for February would be recorded as a: A. debit of $5,121.B. credit of $4,895.C. credit of $5,121.D. debit of $4,895.


An unfavorable labor rate variance would be debited.


11B-25


11. Capizzi Corporation has provided the following data concerning its direct labor costs for February:

The Labor Efficiency Variance for February would be recorded as a: A. debit of $45,562.B. credit of $45,562.C. debit of $44,726.D. credit of $44,726.

Labor Efficiency Variance:

An unfavorable labor efficiency variance would be debited.


11B-26


12. Murdough Corporation's standard wage rate is $10.80 per direct labor-hour (DLH) and according to the standards, each unit of output requires 2.0 DLHs. In February, 1,800 units were produced, the actual wage rate was $9.80 per DLH, and the actual hours were 3,990 DLHs. The Labor Efficiency Variance for February would be recorded as a: A. debit of $4,212.B. credit of $4,212.C. debit of $3,822.D. credit of $3,822.


An unfavorable labor efficiency variance would be debited.


11B-27


13. Kouba Manufacturing Corporation's actual direct labor cost for the month of July was $45,000. Its labor rate variance for July was $1,000 unfavorable. Its labor efficiency variance was $5,000 favorable. What summary journal entry would Kouba make to record this information?

A.

B.

C.

D.

AACSB: AnalyticAICPA BB: Critical ThinkingAICPA FN: MeasurementLearning Objective: 3Learning Objective: 7Level: Medium

11B-28


14. Manikas Corporation has provided the following data concerning its most important raw material, compound V82T:

When recording the purchase of materials, Raw Materials would be: A. debited for $148,920.B. credited for $149,650.C. debited for $149,650.D. credited for $148,920.

AACSB: AnalyticAICPA BB: Critical ThinkingAICPA FN: MeasurementLearning Objective: 7Level: Easy

11B-29


15. Curd Corporation has provided the following data concerning its most important raw material, compound J33X:

When recording the use of materials in production, Raw Materials would be: A. debited for $41,417.B. credited for $41,417.C. debited for $38,922.D. credited for $38,922.


16. Compound G92N is used to make Passero Corporation's major product. The standard cost of G92N is $28.60 per ounce and the standard quantity is 2.9 ounces per unit of output. In the most recent month, 2,000 ounces of the raw material were purchased at a cost of $29.50 per ounce. When recording the purchase of materials, Raw Materials would be: A. credited for $59,000.B. debited for $57,200.C. credited for $57,200.D. debited for $59,000.


11B-30


17. Compound V61Z is used to make Rigby Corporation's major product. The standard cost of compound V61Z is $33.60 per ounce and the standard quantity is 5.5 ounces per unit of output. In the most recent month, 3,130 ounces of the compound were used to make 700 units of the output. When recording the use of materials in production, Raw Materials would be: A. credited for $129,360.B. credited for $105,168.C. debited for $105,168.D. debited for $129,360.

Raw Materials should be credited for $105,168, which is the actual quantity used times the standard cost, or 3,130 ounces x $33.60.


18. Data concerning the direct labor costs for December of Dimpfl Corporation appear below:

The journal entry to record the incurrence of direct labor costs in December would include the following for Work in Process: A. credit of $296,424.B. debit of $296,424.C. credit of $388,962.D. debit of $388,962.


11B-31


19. Kirsch Corporation's standard wage rate is $13.40 per direct labor-hour (DLH) and according to the standards, each unit of output requires 8.9 DLHs. In May, 5,000 units were produced, the actual wage rate was $12.80 per DLH, and the actual hours were 41,790 DLHs. In the journal entry to record the incurrence of direct labor costs in May, the Work in Process entry would consist of a: A. debit of $596,300.B. debit of $534,912.C. credit of $534,912.D. credit of $596,300.


The Dexon Company makes and sells a single product called a Mip and uses a standard costing system. The following standards have been established for one unit of Mip:

There were no inventories of any kind on August 1. During August, the following events occurred:

Purchased 15,000 board feet at the total cost of $24,000. Used 12,000 board feet to produce 2,100 Mips. Used 1,700 hours of direct labor time at a total cost of $20,060.

11B-32


20. To record the purchase of direct materials, the general ledger would include what entry to the Materials Price Variance Account? A. $1,500 creditB. $1,500 debitC. $6,000 creditD. $6,000 debit


21. To record the use of direct materials in production, the general ledger would include what entry to the Materials Quantity Variance account? A. $3,600 debitB. $3,600 creditC. $900 debitD. $900 credit

Materials quantity variance = SP** (AQ - SQ*) = $1.50(12,000 - 12,600) = $900 F*SQ = Standard quantity per unit x Actual output = 6 x 2,100 = 12,600**SP = Total standard cost Number of standard feet = $9.00 6 = $1.50Since the variance is favorable, it would be credited.


11B-33


22. To record the incurrence of direct labor cost and its use in production, the general ledger would include what entry to the Labor Rate Variance account? A. $240 creditB. $240 debitC. $340 debitD. $340 credit

* Standard Rate = Total standard cost Standard hours per unit = $9.60 0.8 = $12Since the variance is favorable, it would be credited.


11B-34


23. To record the incurrence of direct labor costs and its use in production, the general ledger would include what entry to the Labor Efficiency Variance account? A. $480 creditB. $240 debitC. $1,200 debitD. $1,200 credit


* Standard Rate = Total standard cost Standard hours per unit = $9.60 0.8 = $12Since the variance is unfavorable, it would be debited.


Henifin Corporation has provided the following data concerning its most important raw material, compound K91J:


11B-35


24. The debits to the Raw Materials account for January would total: A. $39,330B. $21,981C. $19,395D. $38,790


25. The credits to the Raw Materials account for January would total: A. $21,981B. $19,395C. $38,790D. $39,330


11B-36


26. The Materials Price Variance for January would be recorded as a: A. Credit of $540B. Debit of $306C. Credit of $306D. Debit of $540

Debit Materials Price Variance for $540, or 900 liters x (AP - SP) = 900 liters x ($43.70 - $43.10) = $540


27. The Materials Quantity Variance for January would be recorded as a: A. Credit of $2,586B. Credit of $16,809C. Debit of $16,809D. Debit of $2,586

Standard quantity allowed for the actual output (100 units at 4.5 liters per unit) = 450 litersDebit Materials Quantity Variance for SP (AQ - SQ) = $43.10 (510 - 450) = $2,586


11B-37


Compound C90N is a raw material used to make Mosbarger Corporation's major product. The standard cost of compound C90N is $38.20 per ounce and the standard quantity is 8.0 ounces per unit of output. Data concerning the compound for September appear below:


28. The debits to the Raw Materials account for September would total: A. $41,250B. $30,942C. $30,560D. $42,020


29. The credits to the Raw Materials account for September would total: A. $30,560B. $41,250C. $30,942D. $42,020


11B-38


30. The Materials Price Variance for September would be recorded as a: A. Credit of $567B. Credit of $770C. Debit of $567D. Debit of $770

Materials Price Variance = AQ (AP - SP) = 1,100 ($37.50 - $38.20) = $770 FSince the variance is favorable, it would be credited.


31. The Materials Quantity Variance for September would be recorded as a: A. Debit of $382B. Credit of $11,078C. Credit of $382D. Debit of $11,078

Standard quantity allowed for the actual output (100 units at 8.0 liters per unit) = 800 litersMaterials Quantity Variance = SP (AQ - SQ) = $38.20 (810 - 800) = $382 USince the variance is unfavorable, it would be debited.


11B-39


Castanada Corporation has provided the following data concerning its direct labor costs for August:

32. The journal entry to record the incurrence of direct labor costs in August would include the following for Work in Process: A. Debit of $222,768B. Credit of $264,768C. Credit of $222,768D. Debit of $264,768


11B-40


33. The Labor Rate Variance for August would be recorded as a: A. Debit of $18,912B. Credit of $18,912C. Credit of $17,136D. Debit of $17,136


Since the variance is unfavorable, it would be debited.


34. The Labor Efficiency Variance for August would be recorded as a: A. Credit of $24,864B. Debit of $24,864C. Debit of $23,088D. Credit of $23,088



11B-41


Lian Corporation's standard wage rate is $12.10 per direct labor-hour (DLH) and according to the standards, each unit of output requires 7.1 DLHs. In June, 4,500 units were produced, the actual wage rate was $11.90 per DLH, and the actual hours were 35,930 DLHs.

35. In the journal entry to record the incurrence of direct labor costs in June, the Work in Process entry would consist of a: A. debit of $427,567.B. credit of $427,567.C. debit of $386,595.D. credit of $386,595.

* Standard hours allowed = Actual output in units x Standard input per unit = 4,500 x 7.10 = 31,950 hours


11B-42


36. The Labor Rate Variance for June would be recorded as a: A. credit of $6,390.B. credit of $7,186.C. debit of $7,186.D. debit of $6,390.


Since the variance is favorable, it would be credited.


37. The Labor Efficiency Variance for June would be recorded as a: A. debit of $47,362.B. debit of $48,158.C. credit of $48,158.D. credit of $47,362.


Since the variance is unfavorable, it would be debited.


11B-43


Essay Questions

38. Vernon Mills, Inc. is a large producer of men's and women's clothing. The company uses standard costs for all of its products. The standard costs and actual costs per unit of product for a recent period are given below for one of the company's product lines:

During this period, the company produced 4,800 units of this product. A comparison of standard and actual costs for the period on a total cost basis is given below:

There was no inventory of materials on hand at the beginning of the period. During the period, 21,120 yards of materials were purchased, all of which were used in production.

Required:

a. For direct materials, compute the price and quantity variances for the period and prepare journal entries to record all activity relating to direct materials for the period.

b. For direct labor, compute the rate and efficiency variances and prepare a journal entry to record the incurrence of direct labor cost for the period.

c. For variable overhead, compute the rate and efficiency variances.

11B-44


11B-45


AACSB: AnalyticAICPA BB: Critical ThinkingAICPA FN: MeasurementLearning Objective: 2Learning Objective: 3Learning Objective: 4Learning Objective: 7Level: Hard

11B-46


39. The following standards have been established for a raw material used in the production of product N70:

The following data pertain to a recent month's operations:

Required:


b. What is the materials quantity variance for the month?

c. Prepare journal entries to record the purchase and use of the raw material during the month. (All raw materials are purchased on account.)

11B-47


a. Materials price variance = (AQ x AP) - (AQ x SP)= $119,460 - (6,600 x $18.30) = $1,320 F

b. Materials quantity variance = SP(AQ - SQ*)= $18.30(6,000 - 5,760) = $4,392 U

*SQ = Standard quantity per unit x Actual output = 8.0 x 720 = 5,760


11B-48


40. The standards for product C78 call for 2.0 pounds of a raw material that costs $13.30 per pound. Last month, 5,900 pounds of the raw material were purchased for $74,045. The actual output of the month was 2,640 units of product C78. A total of 5,300 pounds of the raw material were used to produce this output.

Required:


b. What is the materials quantity variance for the month?c. Prepare journal entries to record the purchase and use of the raw material during the month. (All raw materials are purchased on account.)

a. Materials price variance = (AQ x AP) - (AQ x SP)= $74,045 - (5,900 x $13.30) = $4,425 F

b. Materials quantity variance = SP(AQ - SQ*)= $13.30(5,300 - 5,280) = $266 U

*SQ = Standard quantity per unit x Actual output = 2.0 x 2,640 = 5,280

c. Journal entries to record the purchase and use of the raw material:


11B-49


41. Schinkel Corporation has provided the following data concerning its most important raw material, compound X87C:


Required:




11B-50


42. Compound A39A is used by Ashline Corporation to make one of its products. The standard cost of compound A39A is $32.00 per ounce and the standard quantity is 8.5 per unit of output. Data concerning the compound in the most recent month appear below:


Required:




11B-51


43. The following direct labor standards have been established for product K62G:

The following data pertain to the most recent month's operations during which 3,040 units of product K62G were made:

Required:



a. Labor rate variance = (AH x AR) - (AH x SR)= $81,130 - (6,100 x $13.60) = $1,830 F

b. Labor efficiency variance = SR(AH - SH*)= $13.60 (6,100 - 6,080) = $272 U

*SH = Standard hours per unit x Actual output = 2.0 x 3,040 = 6,080

c. Journal entries to record the direct labor costs:


11B-52


44. The standards for product V33I specify 8.0 direct labor-hours per unit at $11.20 per direct labor-hour. Last month 760 units of product V33I were produced using 6,500 direct labor-hours at a total direct labor wage cost of $75,075.

Required:



a. Labor rate variance = (AH x AR) - (AH x SR)= $75,075 - (6,500 x $11.20) = $2,275 U

b. Labor efficiency variance = SR(AH - SH*)= $11.20 (6,500 - 6,080) = $4,704 U

*SH = Standard hours per unit x Actual output = 8.0 x 760 = 6,080

c. Journal entries to record the direct labor costs:


11B-53


45. Martorella Corporation has provided the following data concerning its direct labor costs for October:

Required:


Standard quantity allowed for the actual output (6,000 units at 3.6 DLHs per unit) = 21,600 DLHs


11B-54


46. The direct labor standards at Lounsbury Corporation are $12.50 per direct labor-hour (DLH) and 6.1 DLHs per unit of output. In November, 4,700 units were produced, the actual wage rate was $12.50 per DLH, and the actual hours were 29,570 DLHs.

Required:


Standard quantity allowed for the actual output (4,700 units at 6.1 DLHs per unit) = 28,670 DLHs


11B-55

app11b.doc

Documents

raw materials debit

raw materials credit

process debit

materials varianceslo3

materials price variancec

purchase of materials

materials price varianceb

materials price varianced