Question 1

When the actual direct labor-hours are less than the standard direct labor-hours allowed for the actual output of the period, the journal entry would include:
A) Credit to Wages Payable; Credit to Labor Efficiency Variance
B) Credit to Work-In-Process; Credit to Labor Efficiency Variance
C) Credit to Wages Payable; Debit to Labor Efficiency Variance
D) Credit to Work-In-Process; Debit to Labor Efficiency Variance

Accepted Answer

When actual direct labor-hours are less than the standard hours allowed, it indicates a favorable labor efficiency variance. A favorable variance is credited, so the journal entry would include a credit to the Labor Efficiency Variance account.

Question 2

A favorable materials quantity variance would appear as a debit in a journal entry.

Accepted Answer

A favorable materials quantity variance indicates that less material was used than expected, resulting in a credit entry, not a debit.

Question 3

Lafaso Corporation has provided the following data concerning its direct labor costs for July: 
The Labor Rate Variance for July would be recorded as a:
A) credit of $7,014.
B) debit of $8,584.
C) debit of $7,014.
D) credit of $8,584.

Accepted Answer

A

Question 4

When the actual price paid on credit for a raw material is less than its standard price, the journal entry would include:
A) Debit to Raw Materials; Credit to Materials Price Variance
B) Debit to Accounts Payable; Credit to Materials Price Variance
C) Debit to Raw Materials; Debit to Materials Price Variance
D) Debit to Accounts Payable; Debit to Materials Price Variance

Accepted Answer

When the actual price paid on credit for a raw material is less than its standard price, a credit balance is generated in the Materials Price Variance account. To reduce this credit balance, a debit is made to Raw Materials, and an equal credit is made to the Materials Price Variance account. Therefore, the correct journal entry would be Debit to Raw Materials; Credit to Materials Price Variance. Option B is incorrect because when paying on credit, a debit is made to Accounts Payable, not Materials Price Variance. Option C is incorrect because, in this scenario, there is no need for a debit to the Materials Price Variance account as the variance is favorable. Option D is incorrect because it incorrectly debits the Materials Price Variance account instead of Raw Materials.

Question 5

Manikas Corporation has provided the following data concerning its most important raw material, compound V82T: 
When recording the purchase of materials, Raw Materials would be:
A) debited for $148,920.
B) credited for $149,650.
C) debited for $149,650.
D) credited for $148,920.

Accepted Answer

The answer of Manikas Corporation has provided the following data...

Question 6

Kirsch Corporation's standard wage rate is $13.40 per direct labor-hour (DLH) and according to the standards, each unit of output requires 8.9 DLHs. In May, 5,000 units were produced, the actual wage rate was $12.80 per DLH, and the actual hours were 41,790 DLHs. In the journal entry to record the incurrence of direct labor costs in May, the Work in Process entry would consist of a:
A) debit of $596,300.
B) debit of $534,912.
C) credit of $534,912.
D) credit of $596,300.

Accepted Answer

The Work in Process account is debited with the standard cost of direct labor for the units produced. The standard cost is calculated as the standard wage rate multiplied by the standard hours for the actual output. For 5,000 units, the standard hours are 5,000 units * 8.9 DLHs/unit = 44,500 DLHs. The standard cost is 44,500 DLHs * $13.40/DLH = $596,300.

Question 7

Lemoine Corporation's standard wage rate is $11.50 per direct labor-hour (DLH) and according to the standards, each unit of output requires 5.5 DLHs. In February, 8,900 units were produced, the actual wage rate was $11.60 per DLH, and the actual hours were 51,210 DLHs. The Labor Rate Variance for February would be recorded as a:
A) debit of $5,121.
B) credit of $4,895.
C) credit of $5,121.
D) debit of $4,895.

Accepted Answer

The Labor Rate Variance is calculated as (Actual Rate - Standard Rate) x Actual Hours. Here, it is ($11.60 - $11.50) x 51,210 = $5,121, which is unfavorable, hence a debit.

Question 8

The Dexon Company makes and sells a single product called a Mip and uses a standard costing system. The following standards have been established for one unit of Mip:  There were no inventories of any kind on August 1. During August, the following events occurred:
  Purchased 15,000 board feet at the total cost of $24,000.
  Used 12,000 board feet to produce 2,100 Mips.
  Used 1,700 hours of direct labor time at a total cost of $20,060.
-To record the purchase of direct materials, the general ledger would include what entry to the Materials Price Variance Account?
A) $1,500 credit
B) $1,500 debit
C) $6,000 credit
D) $6,000 debit

Accepted Answer

The answer of The Dexon Company makes and sells a...

Question 9

Drake Company purchased materials on account. The entry to record the purchase of materials having a standard cost of $1.50 per pound from a supplier at $1.60 per pound would include a:
A) credit to Raw Materials Inventory.
B) debit to Work in Process.
C) credit to Materials Price Variance.
D) debit to Materials Price Variance.

Accepted Answer

The entry to record the purchase of materials at a price higher than the standard cost would result in a variance. The debit to Materials Price Variance account indicates an unfavorable variance for paying a higher price than the standard cost. The credit to Accounts Payable account shows the liability created for purchasing materials on account. There is no credit to Raw Materials Inventory or Materials Price Variance and no debit to Work in Process at the time of purchase.

Question 10

Kouba Manufacturing Corporation's actual direct labor cost for the month of July was $45,000. Its labor rate variance for July was $1,000 unfavorable. Its labor efficiency variance was $5,000 favorable. What summary journal entry would Kouba make to record this information?
A) 
B) 
C) 
D)

Accepted Answer

The actual direct labor cost is recorded in the Direct Labor account, and since it is an actual amount, it will be recorded at face value, i.e., $45,000. The labor rate variance, being unfavorable, means that the labor was more expensive than expected, and hence it is treated as an overhead expense and recorded in the Manufacturing Overhead account. The labor efficiency variance, being favorable, means that the company used less labor hours than expected, and hence it is treated as a direct labor cost and subtracted from the Direct Labor account.

Therefore, the journal entry would be:
Direct Labor: $45,000
Manufacturing Overhead: $1,000
Direct Labor Efficiency Variance: $5,000

Note: The labor rate variance is not recorded in the journal entry as it is an overhead expense and not a direct labor cost.

Question 11

Which of the following entries would correctly record the charging of direct labor costs to Work in Process given an unfavorable labor efficiency variance and a favorable labor rate variance?
A) 
B) 
C) 
D)

Accepted Answer

The answer of Which of the following entries would correctly...

Question 12

When the actual wage rate paid to direct labor workers is less than the standard wage rate, the journal entry would include:
A) Credit to Wages Payable; Credit to Labor Rate Variance
B) Credit to Work-In-Process; Credit to Labor Rate Variance
C) Credit to Wages Payable; Debit to Labor Rate Variance
D) Credit to Work-In-Process; Debit to Labor Rate Variance

Accepted Answer

The answer of When the actual wage rate paid to...

Question 13

Curd Corporation has provided the following data concerning its most important raw material, compound J33X: 
When recording the use of materials in production, Raw Materials would be:
A) debited for $41,417.
B) credited for $41,417.
C) debited for $38,922.
D) credited for $38,922.

Accepted Answer

The answer of Curd Corporation has provided the following data...

Question 14

Data concerning the direct labor costs for December of Dimpfl Corporation appear below: 
The journal entry to record the incurrence of direct labor costs in December would include the following for Work in Process:
A) credit of $296,424.
B) debit of $296,424.
C) credit of $388,962.
D) debit of $388,962.

Accepted Answer

The answer of Data concerning the direct labor costs for...

Question 15

Murdough Corporation's standard wage rate is $10.80 per direct labor-hour (DLH) and according to the standards, each unit of output requires 2.0 DLHs. In February, 1,800 units were produced, the actual wage rate was $9.80 per DLH, and the actual hours were 3,990 DLHs. The Labor Efficiency Variance for February would be recorded as a:
A) debit of $4,212.
B) credit of $4,212.
C) debit of $3,822.
D) credit of $3,822.

Accepted Answer

The Labor Efficiency Variance is calculated as (Actual Hours - Standard Hours) x Standard Rate. In this case, the Actual Hours are 3,990 DLHs, the Standard Hours are 1,800 units x 2.0 DLHs = 3,600 DLHs, and the Standard Rate is $10.80 per DLH. Therefore, the Labor Efficiency Variance is (3,990 DLHs - 3,600 DLHs) x $10.80 per DLH = $4,212. Since the actual hours are greater than the standard hours, the variance is unfavorable and is recorded as a debit.

Question 16

A favorable labor efficiency variance would result in a credit balance in the labor efficiency variance account.

Accepted Answer

A favorable labor efficiency variance means that actual hours worked were less than the standard hours allowed for producing the output, resulting in lower labor costs. This would result in a credit balance in the labor efficiency variance account.

Question 17

Compound V61Z is used to make Rigby Corporation's major product. The standard cost of compound V61Z is $33.60 per ounce and the standard quantity is 5.5 ounces per unit of output. In the most recent month, 3,130 ounces of the compound were used to make 700 units of the output. When recording the use of materials in production, Raw Materials would be:
A) credited for $129,360.
B) credited for $105,168.
C) debited for $105,168.
D) debited for $129,360.

Accepted Answer

The Raw Materials account is credited for the actual cost of materials used. The actual quantity used is 3,130 ounces at the standard cost of $33.60 per ounce, resulting in a credit of $105,168 (3,130 ounces * $33.60/ounce).

Question 18

Compound G92N is used to make Passero Corporation's major product. The standard cost of G92N is $28.60 per ounce and the standard quantity is 2.9 ounces per unit of output. In the most recent month, 2,000 ounces of the raw material were purchased at a cost of $29.50 per ounce. When recording the purchase of materials, Raw Materials would be:
A) credited for $59,000.
B) debited for $57,200.
C) credited for $57,200.
D) debited for $59,000.

Accepted Answer

The standard cost of G92N is $28.60 per ounce and 2,000 ounces were purchased, so the total standard cost of the materials purchased is $28.60 * 2,000 = $57,200. When recording the purchase of materials, Raw Materials would be debited for this amount.

Question 19

Capizzi Corporation has provided the following data concerning its direct labor costs for February: 
The Labor Efficiency Variance for February would be recorded as a:
A) debit of $45,562.
B) credit of $45,562.
C) debit of $44,726.
D) credit of $44,726.

Accepted Answer

Labor Efficiency Variance is calculated as (Standard Hours Allowed for Actual Output – Actual Hours Worked) x Standard Rate per Hour.

In this case, the actual hours worked were 405,000 and the standard allowed hours for actual output were 390,000. Thus, the labor efficiency variance would be (390,000-405,000) x $0.116 = -$1,740. Therefore, we need to record a debit to adjust for the unfavorable variance.

Hence, the correct answer is option C, a debit of $44,726.

Question 20

When the actual amount of a raw material used in production is less than the standard amount allowed for the actual output, the journal entry would include:
A) Debit to Raw Materials; Credit to Materials Quantity Variance
B) Debit to Work-In-Process; Credit to Materials Quantity Variance
C) Debit to Raw Materials; Debit to Materials Quantity Variance
D) Debit to Work-In-Process; Debit to Materials Quantity Variance

Accepted Answer

When the actual amount of a raw material used in production is less than the standard amount allowed for the actual output, the difference is known as the materials quantity variance. This variance is recorded in the general ledger by debiting work-in-process and crediting the materials quantity variance account. Therefore, the correct journal entry is Debit to Work-In-Process; Credit to Materials Quantity Variance.

Quiz 28: Journal Entries to Record Variances

When the actual direct labor-hours are less than the standard direct labor-hours allowed for the actual output of the period, the journal entry would include:

A favorable materials quantity variance would appear as a debit in a journal entry.

Lafaso Corporation has provided the following data concerning its direct labor costs for July: The Labor Rate Variance for July would be recorded as a:

When the actual price paid on credit for a raw material is less than its standard price, the journal entry would include:

Manikas Corporation has provided the following data concerning its most important raw material, compound V82T: When recording the purchase of materials, Raw Materials would be:

Drake Company purchased materials on account. The entry to record the purchase of materials having a standard cost of $1.50 per pound from a supplier at $1.60 per pound would include a:

Kouba Manufacturing Corporation's actual direct labor cost for the month of July was $45,000. Its labor rate variance for July was $1,000 unfavorable. Its labor efficiency variance was $5,000 favorable. What summary journal entry would Kouba make to record this information?

Which of the following entries would correctly record the charging of direct labor costs to Work in Process given an unfavorable labor efficiency variance and a favorable labor rate variance?

When the actual wage rate paid to direct labor workers is less than the standard wage rate, the journal entry would include:

Curd Corporation has provided the following data concerning its most important raw material, compound J33X: When recording the use of materials in production, Raw Materials would be:

Data concerning the direct labor costs for December of Dimpfl Corporation appear below: The journal entry to record the incurrence of direct labor costs in December would include the following for Work in Process:

A favorable labor efficiency variance would result in a credit balance in the labor efficiency variance account.

Capizzi Corporation has provided the following data concerning its direct labor costs for February: The Labor Efficiency Variance for February would be recorded as a:

When the actual amount of a raw material used in production is less than the standard amount allowed for the actual output, the journal entry would include: