Question 1

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:

Accepted Answer

The Labor Rate Variance is favorable if the actual labor rate is less than the standard rate, resulting in a credit. The given choice A indicates a credit of $7,014, suggesting a favorable variance.

Question 2

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:

Accepted Answer

B

Question 3

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:

Accepted Answer

When the materials are purchased at a price that is different from the standard cost, a Materials Price Variance (MPV) occurs. If the actual price paid for the materials is higher than the standard cost, as in this case, there will be an unfavorable MPV. To record the purchase, Drake Company will debit Raw Materials Inventory for the actual cost of the materials, which is $1.60 per pound. However, the standard cost of the materials is only $1.50 per pound, so Drake Company will need to credit Materials Price Variance for the difference between the actual cost and the standard cost, which is $0.10 per pound. Therefore, the entry to record the purchase of materials would include a debit to Raw Materials Inventory and a credit to Materials Price Variance.

Question 4

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:

Accepted Answer

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

Question 5

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:

Accepted Answer

The answer of Kirsch Corporation's standard wage rate is $13.40...

Question 6

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:

Accepted Answer

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

Question 7

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:

Accepted Answer

Labor Efficiency Variance:
An unfavorable labor efficiency variance would be debite

Question 8

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:

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.

Question 9

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

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 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) $\begin{array}{lr}
\text { Work in Process } & 41,000 \
\text { Labor Efficiency Variance } & 5,000
\end{array}$

$\quad $ $\quad $$\begin{array}{lr}
\text { Labor Rate Variance } & 1,000 \
\text { Wages Payable } & 45,000
\end{array}$

Accepted Answer

The answer of Kouba Manufacturing Corporation's actual direct labor cost...

Question 11

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

Accepted Answer

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

Question 12

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

Accepted Answer

A favorable materials quantity variance means that less material was used than what was expected, resulting in cost savings. A cost savings would result in a credit, not a debit, in the journal entry.

Question 13

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:

Accepted Answer

The answer of When the actual direct labor-hours are less...

Question 14

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:
$\bullet$ Purchased 15,000 board feet at the total cost of $24,000.
$\bullet$ Used 12,000 board feet to produce 2,100 Mips.
$\bullet$ Used 1,700 hours of direct labor time at a total cost of $20,060.
 $\begin{array}{lcc}
&\text { Standard Quantity or Hours }&\text { Standard Cost per Mip }\ 
\text { Direct materials ...... } & 6 \text { board feet } & \$ 9.00 \
\text { Direct labor .......... } & 0.8 \text { hours } & \$ 9.60
\end{array}$
-To record the purchase of direct materials,the general ledger would include what entry to the Materials Price Variance Account?

Accepted Answer

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

Question 15

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:

Accepted Answer

Raw Materials should be credited for $105,168,which is the actual quantity used times the standard cost,or 3,130 ounces x $33.60.

Question 16

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:

Accepted Answer

The purchase of 2,000 ounces of G92N at $29.50 per ounce results in a total cost of $59,000 ($29.50 x 2,000). Since this is a purchase of raw materials, the Raw Materials account would be debited for the full amount of $59,000.

Question 17

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?

Accepted Answer

To record the charging of direct labor costs to Work in Process (WIP) with an unfavorable labor efficiency variance and a favorable labor rate variance, you would need to make an entry that reflects the actual labor costs, adjusts for the variances, and credits the amount paid to employees. Here's how the journal entry would look:
Debit: Work in Process (for the standard cost of labor)
Debit: Labor Efficiency Variance (for the unfavorable variance amount)
Credit: Labor Rate Variance (for the favorable variance amount)
Credit: Wages Payable (for the actual amount paid to employees)
The entry increases the Work in Process account for the standard labor cost that is expected for the actual production. The unfavorable labor efficiency variance indicates that more labor hours were used than expected (inefficiency), so this variance is debited, increasing the total labor cost charged to WIP. The favorable labor rate variance indicates that the actual rate paid for labor is less than the standard rate, so this variance is credited, reducing the total labor cost. Finally, Wages Payable is credited for the total actual amount paid to employees, reflecting the cash obligation to them.
The entry would look like this:
A) Work in Process                XXX
   Labor Efficiency Variance      XXX
      Labor Rate Variance         XXX
      Wages Payable               XXX
Where "XXX" represents the monetary amounts for each part of the entry. The actual amounts would depend on the company's specific labor cost details and variance calculations.

Question 18

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 labor hours used were less than the standard labor hours allowed for the actual output. This results in a credit balance in the labor efficiency variance account, indicating that less labor cost was incurred than originally planned.

Question 19

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:

Accepted Answer

Labor Rate Variance:
An unfavorable labor rate variance would be debite

Question 20

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:

Accepted Answer

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

Quiz 11: Journal Entries to Record Variances