Blue Devil Inc.’s direct labor cost information for April 2021 is as follows. Standard Costs: Units of Production 7,600 units Hours of Production 0.75 hour Wage Rate $13.60 per hour Actual Costs: Units of Production 7,600 units Total Hours of Production 5,900 hours Wage Rate $13.80 per hour Required: Prepare the journal entries to record standard costs, actual costs, and related variances for direct labor. (Hint: the related accounts include work-in-process, wages payable, rate variance, and efficiency variance)
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Blue Devil Inc.’s direct labor cost information for April 2021 is as follows.
| Units of Production | 7,600 units |
| Hours of Production | 0.75 hour |
| Wage Rate | $13.60 per hour |
Actual Costs:
| Units of Production | 7,600 units |
| Total Hours of Production | 5,900 hours |
| Wage Rate | $13.80 per hour |
Required:
Prepare the
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