Question 1

A favorable labor efficiency variance is recorded as a credit in the Labor Efficiency Variance account.

Accepted Answer

A favorable labor efficiency variance means that the actual labor hours needed to produce the output were less than the standard labor hours allowed for the output. This results in a cost saving, which is credited to the Labor Efficiency Variance account.

Question 2

Dolittle Company purchased materials on account.The entry to record the purchase of materials having a standard cost of $0.50 per pound from a supplier at $0.60 per pound would include a:

Accepted Answer

Since the materials were purchased at a higher cost than the standard cost, there is an unfavorable Materials Price Variance, which is recorded as a debit to Materials Price Variance account.

Question 3

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

Accepted Answer

When the actual direct labor-hours exceed the standard direct labor-hours allowed for the actual output of the period, it means that there was an unfavorable labor efficiency variance. This variance should be debited to Work-In-Process as it is a manufacturing cost and should not be expensed in the period. Therefore, the journal entry should be a debit to Work-In-Process for the actual direct labor-hours worked and a debit to Labor Efficiency Variance for the unfavorable variance.

Question 4

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

Accepted Answer

When the actual amount of a raw material used in production is greater than the standard amount allowed for the actual output, it is considered an unfavorable variance and is recorded as a debit to Work-In-Process (as this is where the raw materials are being used in production) and a debit to Materials Quantity Variance (which is a contra account to Raw Materials). Therefore, the correct answer is D, which includes both the debit to Work-In-Process and the debit to Materials Quantity Variance. Options A and C include a credit to Materials Quantity Variance, which is incorrect as it needs to be debited for an unfavorable variance. Option B only includes a debit to Work-In-Process, which is incorrect as the variance needs to be recorded as well.

Question 5

A favorable labor rate variance is recorded as a debit in the Labor Rate Variance account.

Accepted Answer

A favorable labor rate variance indicates that the actual labor rate was lower than the standard labor rate. Therefore, it is credited in the Labor Rate Variance account.

Question 6

Gotay Corporation's standard wage rate is $12.00 per direct labor-hour (DLH)and according to the standards,each unit of output requires 5.8 DLHs.In December,4,900 units were produced,the actual wage rate was $11.00 per DLH,and the actual hours were 27,870 DLHs.The Labor Rate Variance for December would be recorded as a:

Accepted Answer

Labor rate variance = AH(AR - SR)
= 27,870 hours ($11.00 per hour - $12.00 per hour)
= 27,870 hours (-$1.00 per hour)= $27,870 F

Question 7

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

Accepted Answer

Labor rate variance = AH(AR - SR)
= 26,460 hours ($13.80 per hour - $13.00 per hour)
= $365,148 - $343,980 = $21,168 U

Question 8

Durrant Corporation has provided the following data concerning its most important raw material,compound O96H:  When recording the use of materials in production,Raw Materials would be:

Accepted Answer

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

Question 9

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

Accepted Answer

When actual direct labor-hours are less than the standard hours allowed, it indicates a favorable labor efficiency variance. The journal entry would credit the Labor Efficiency Variance account to reflect this favorable variance.

Question 10

If the actual direct labor-hours used is less than the standard direct labor-hours allowed for the actual output,then the journal entry to record the Labor Efficiency Variance would be a debit.

Accepted Answer

The answer of If the actual direct labor-hours used is...

Question 11

Denise Corporation's standard wage rate is $14.40 per direct labor-hour (DLH)and according to the standards,each unit of output requires 7.0 DLHs.In May,5,200 units were produced,the actual wage rate was $13.70 per DLH,and the actual hours were 36,520 DLHs.The Labor Efficiency Variance for May would be recorded as a:

Accepted Answer

SH = 5,200 units F1F1F1S1F1F1F10 7 hours per unit = 36,400 hours
Labor efficiency variance = (AH - SH)SR
= (36,520 hours - 36,400 hours)$14.40 per hour
= (120 hours)$14.40 per hour = $1,728 U

Question 12

At the end of the year,a company's Manufacturing Overhead account contained the following data:  If the denominator activity for the year was 40,000 machine-hours,and if 36,400 machine-hours were allowed for the year's production,then the predetermined overhead rate per machine-hour was:

Accepted Answer

Overhead applied = Predetermined overhead rate F1F1F1S1F1F1F10 Standard hours allowed for the actual output
$78,260 = Predetermined overhead rate F1F1F1S1F1F1F10 36,400 hours
Predetermined overhead rate = $78,260 F1F1F1S1F1F1F10 36,400 hours = $2.15 per hour

Question 13

Although formal entry of standard costs and variances into the accounting records is not required,some organizations make such entries in order to emphasize the importance of variances as well as to simplify the bookkeeping process.

Accepted Answer

Although it is not required, some organizations choose to enter standard costs and variances into their accounting records. This can serve as a reminder of their importance and can also simplify bookkeeping procedures.

Question 14

If the actual quantity of materials used is less than the standard quantity of materials allowed for the actual output,then the journal entry to record the Direct Materials Quantity Variance would be a credit.

Accepted Answer

When the actual quantity of materials used is less than the standard quantity of materials allowed for the actual output, it means that less materials were used than expected. As a result, the Direct Materials Quantity Variance is favorable, which is a credit to the variance account.

Question 15

An unfavorable materials quantity variance is recorded as a credit in the Materials Quantity Variance account.

Accepted Answer

An unfavorable materials quantity variance is caused by using more materials than expected, which leads to higher costs than budgeted. Therefore, it is recorded as a debit in the Materials Quantity Variance account, not a credit.

Question 16

If the actual rate per direct labor-hour exceeds the standard rate per direct labor-hour,then the journal entry to record the Direct Labor Rate Variance would be a credit.

Accepted Answer

If the actual rate per direct labor-hour exceeds the standard rate per direct labor-hour, it means that the actual costs were higher than the planned or budgeted costs, resulting in an unfavorable variance. The Direct Labor Rate Variance is calculated by multiplying the difference between the actual labor rate and the standard labor rate by the actual quantity of hours worked. Since the variance is unfavorable, the journal entry would be a debit to increase the Direct Labor Expense account to reflect the additional costs incurred.

Question 17

If the actual purchase price for materials exceeds the standard purchase price,then the journal entry to record the Direct Materials Price Variance would be a debit.

Accepted Answer

When the actual purchase price for materials exceeds the standard purchase price, the Direct Materials Price Variance is unfavorable and requires a debit entry.

Question 18

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

Accepted Answer

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Question 19

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

Accepted Answer

SH = 3,600 units F1F1F1S1F1F1F10 8.4 hours per units = 30,240 hours
Labor efficiency variance = (AH - SH)SR
= (25,610 hours - 30,240 hours)$12.50 per hour
= (-4,630 hours)$12.50 per hour = $57,875 F

Question 20

Raybould Corporation has provided the following data concerning its most important raw material,compound M31P:  When recording the purchase of materials,Raw Materials would be:

Accepted Answer

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

Quiz 24: Journal Entries to Record Variances