Post Parts manufactures components used in audio and video systems. The year just ended was Post's first year of operations and they are preparing financial statements. The immediate issue facing Post is the treatment of the direct labor costs. Post set a standard at the beginning of the year that allowed 0.25 hours of direct labor for each unit of output. The standard rate for direct labor is $50 per hour. During the year, the company produced 258,000 units. A count of the ending finished goods inventory showed 15,480 units remaining in the warehouse. There are never any work-in-process inventories at Post. Post used 61,880 hours of labor. Total direct labor costs for the year amounted to $3,241,750. Required: a. and b. What was the direct labor price variance and the direct labor efficiency variance for the year? c. Assume Post writes off all variances to Cost of Goods Sold. Prepare the entries Cook would make to record and close out the variances. d. Assume Post prorates all variances to the appropriate accounts. Prepare the entries Post would make to record and close out the variances. Complete this question by entering your answers in the tabs below.
Post Parts manufactures components used in audio and video systems. The year just ended was Post's first year of operations and they are preparing financial statements. The immediate issue facing Post is the treatment of the direct labor costs. Post set a standard at the beginning of the year that allowed 0.25 hours of direct labor for each unit of output. The standard rate for direct labor is $50 per hour. During the year, the company produced 258,000 units. A count of the ending finished goods inventory showed 15,480 units remaining in the warehouse. There are never any work-in-process inventories at Post. Post used 61,880 hours of labor. Total direct labor costs for the year amounted to $3,241,750. Required: a. and b. What was the direct labor price variance and the direct labor efficiency variance for the year? c. Assume Post writes off all variances to Cost of Goods Sold. Prepare the entries Cook would make to record and close out the variances. d. Assume Post prorates all variances to the appropriate accounts. Prepare the entries Post would make to record and close out the variances. Complete this question by entering your answers in the tabs below.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
3
Transcribed Image Text:Post Parts manufactures components used in audio and video systems. The year just ended was Post's first year of operations
and they are preparing financial statements. The immediate issue facing Post is the treatment of the direct labor costs. Post set a
standard at the beginning of the year that allowed 0.25 hours of direct labor for each unit of output. The standard rate for direct
labor is $50 per hour. During the year, the company produced 258,000 units. A count of the ending finished goods inventory
showed 15,480 units remaining in the warehouse. There are never any work-in-process inventories at Post. Post used 61,880
hours of labor. Total direct labor costs for the year amounted to $3,241,750.
Required:
a. and b. What was the direct labor price variance and the direct labor efficiency variance for the year?
c. Assume Post writes off all variances to Cost of Goods Sold. Prepare the entries Cook would make to record and close out the
variances.
d. Assume Post prorates all variances to the appropriate accounts. Prepare the entries Post would make to record and close out
the variances.
Complete this question by entering your answers in the tabs below.
Req A and B
Req C
Req D
What was the direct labor price variance and the direct labor efficiency variance for the year?
Note: Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not
select either option.
Direct labor price variance
Direct labor efficiency variance
< Req A and B.
Req C >
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education