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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.

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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Help Save & E 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 Assume Post writes off all variances to Cost of Goods Sold. Prepare the entries Cook would make to record and close out the variances. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet < A B Record the closure of direct labor cost variances to Cost of Goods Sold. Note: Enter debits before credits. Event General Journal Debit Credit 2 Direct labor efficiency variance Cost of goods sold 131,000 16,750 Direct labor price variance 147,750 Record entry Clear entry View general journal
Transcribed Image Text:Help Save & E 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 Assume Post writes off all variances to Cost of Goods Sold. Prepare the entries Cook would make to record and close out the variances. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet < A B Record the closure of direct labor cost variances to Cost of Goods Sold. Note: Enter debits before credits. Event General Journal Debit Credit 2 Direct labor efficiency variance Cost of goods sold 131,000 16,750 Direct labor price variance 147,750 Record entry Clear entry View general journal
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