Exercise 17-21 (Algo) Prorating Direct Labor Cost Variances (LO 17-1)Post Parts manufactures components used in audio and video systems. The year just ended was Post's first year of operations andthey are preparing financial statements. The immediate issue facing Post is the treatment of the direct labor costs. Post set a standardat 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 $70 perhour. During the year, the company produced 278,000 units. A count of the ending finished goods inventory showed 16,680 unitsremaining in the warehouse. There are never any work-in-process inventories at Post. Post used 67,830 hours of labor. Total directlabor costs for the year amounted to $4,893,350.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 thevariances.d. Assume Post prorates all variances to the appropriate accounts. Prepare the entries Post would make to record and close out thevariances.Complete this question by entering your answers in the tabs below.Req A and BReq CReq D

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Description: Exercise 17-21 (Algo) Prorating Direct Labor Cost Variances (LO 17-1)Post Parts manufactures components used in audio and video systems. The year just ended was Post's first year of operations andthey are preparing financial statements. The immediat

Labor rate (price) variance:> the variance between the actual labor rate and the standard labor…

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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.

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.

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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Concept explainers

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.

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Exercise 17-21 (Algo) Prorating Direct Labor Cost Variances (LO 17-1)
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 $70 per
hour. During the year, the company produced 278,000 units. A count of the ending finished goods inventory showed 16,680 units
remaining in the warehouse. There are never any work-in-process inventories at Post. Post used 67,830 hours of labor. Total direct
labor costs for the year amounted to $4,893,350.
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

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