Eagle Company uses a standard cost system that has provided the following data: Units of output manufactured: 85 Direct labor: Standard hours allowed: 2 hours per unit of product Standard wage rate: $17.00 per hour Actual direct labor: 190 hours, total cost of $3,610 The journal entry to record the cost of direct labor used in this period includes: Multiple Choice A debit to Work in Process Inventory of $3,230. A debit to Work in Process Inventory of $2,890. A credit to Direct Labor Rate Variance of $380. A credit to Direct Labor Rate Variance of $340.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Eagle Company uses a
| Units of output manufactured: | 85 | ||
| Direct labor: | |||
| Standard hours allowed: | 2 | hours per unit of product | |
| Standard wage rate: | $17.00 | per hour | |
| Actual direct labor: | 190 | hours, total cost of $3,610 | |
The
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A debit to Work in Process Inventory of $3,230.
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A debit to Work in Process Inventory of $2,890.
-
A credit to Direct Labor Rate Variance of $380.
-
A credit to Direct Labor Rate Variance of $340.
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