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?

Question

Quizplus · 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.

Which of the Following Entries Would Correctly Record the Charging