Answered: Boss Company’s standard cost accounting…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter9: Standard Costing: A Functional-based Control Approach

Section: Chapter Questions

Problem 21E: Madison Company uses the following rule to determine whether direct labor efficiency variances ought...

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Boss Company’s standard cost accounting system recorded this information from its December operations. Standard direct materials cost $100,000
Direct materials quantity variance (unfavorable) 3,000
Direct materials price variance (favorable) 500
Actual direct labor cost 90,000
Direct labor efficiency variance (favorable) . 7,000
Direct labor rate variance (unfavorable) 1,200
Actual overhead cost . 375,000
Volume variance (unfavorable) . 12,000
Controllable variance (unfavorable) . 9,000
Required
1. Prepare December 31 journal entries to record the company’s costs and variances for the month. (Do
not prepare the journal entry to close the variances.)
Analysis Component
2. If management investigates all variances above $5,000, which variances will management investigate?

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