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

Name: Exercise 17-21 (Algo) Prorating Direct Labor Cost Variances (LO 17-1)
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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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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Which of the following is true of direct labor variances? a. The labor efficiency variance measures the difference between what was paid to direct laborers and what should have been paid. b. The labor rate variance measures the difference between the labor hours that were actually used and the labor hours that should have been used. c. The labor rate variance measures the difference between the labor hours that were originally budgeted and the labor hours that should have been used. d. The labor rate and labor efficiency variances will always add up to the total labor variance. e. The labor rate variance measures the difference between the labor hours that were actually used and the labor hours that were originally budgeted.
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Primara Corporation has a standard costing system in which it applies overhead to products on the basis of the standard direct labour- hours allowed for the actual output of the period. Data concerning the most recent year appear below: Total budgeted fixed overhead cost for the year Actual fixed overhead cost for the year Budgeted standard direct labour-hours (denominator level of activity) Actual direct labour-hours Standard direct labour-hours allowed for the actual output $ 500,000 $ 508,000 50,000 54,000 52,000 Required: 1. Compute the fixed portion of the predetermined overhead rate for the year. Predetermined overhead rate per DLH
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Question 3 A shoe company had the following journal entries recorded for the end of June. Materials Control 300,000 Direct Materials Price Variance 10,000 Accounts Payable Control 290,000 Work-in-Process Control 120,000 8,000 Direct Materials Efficiency Variance Materials Control 128,000 Standard cost for direct labor per pair of shoes: 1 hour at a standard price of $100 each. The company produced 8,500 shoes in June with 8,470 hours and incurred total direct labor costs of $832,000.
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Determine the direct materials quantity and direct labor time variances. Round your per unit computations to two decimal places and round your answers to the nearest dollar, if required. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct materials quantity variance Direct labor time variance