
1. a
Calculate the direct labor efficiency variance and state whether it is favorable (F) or unfavorable (U).
1. a

Explanation of Solution
Calculate the direct labor efficiency variance and state whether it is favorable (F) or unfavorable (U).
1. b
Calculate the direct labor rate variance and state whether it is favorable (F) or unfavorable (U).
1. b

Explanation of Solution
Calculate the direct labor rate variance and state whether it is favorable (F) or unfavorable (U).
1. c
Calculate the actual number of kilograms of material used in the production process during the month.
1. c

Explanation of Solution
Calculate the actual number of kilograms of material used in the production process during the month.
1. d
Calculate the actual price paid per kilogram of material during the month.
1. d

Explanation of Solution
Calculate the actual price paid per kilogram of material during the month.
Note: price variance is calculated at the point of purchase.
Working note:
(1)Calculate the direct materials purchase-price variance:
1. e
Calculate the amount of direct materials cost and direct labor cost transferred to the finished goods inventory account during the end of the month.
1. e

Explanation of Solution
Calculate the amount of direct materials cost and direct labor cost transferred to the finished goods inventory account during the end of the month.
1. f
Calculate the total amount of direct materials cost and direct labor cost in the work-in-process inventory account during the end of the month.
1. f

Explanation of Solution
Calculate the total amount of direct materials cost and direct labor cost in the work-in-process inventory account during the end of the month.
Materials | Labor | Total | |
Equivalent units in ending WIP inventory | 800 | 600 | |
× $40 | × $109.20 | ||
Ending inventory at standard cost | $32,000.00 | $65,250 | $97,520 |
Table (1)
2.
Prepare
2.

Explanation of Solution
Prepare journal entries to record all transaction.
Date | Account Title and Explanation | Debit ($) | Credit ($) |
Direct materials Inventory | $250,000 | ||
Direct materials Purchase-price Variance | $750 | ||
Accounts Payable (plug) | $249,250 | ||
[Purchase of 50,000 kilograms of materials for $249,250 ($4.985 per kg.)] |
Table (2)
Date | Account Title and Explanation | Debit ($) | Credit ($) |
Work-in-process inventory | $256,000 | ||
Direct materials usage variance (plug) | $1,500 | ||
Direct materials inventory | $257,500 | ||
(Issued 51,500 kilograms of material to produce 6,400 equivalent units) |
Table (3)
Date | Account Title and Explanation | Debit ($) | Credit ($) |
Work-in-process inventory | $677,040 | ||
Direct labor rate variance | $64,300 | ||
Direct labor efficiency variance | $12,740 | ||
Accrued payroll | $600,000 | ||
(To record direct labor wages and standard direct labor cost incurred to manufacture 6,200 equivalent units) |
Table (3)
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Chapter 14 Solutions
Cost Management
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