Suzy-Q Corporation has established the following standard cost per unit: Materials—5.5 lb @ $2.20 per lb . . . ............................... $12.10 Labor—1.8 hr @ $6.25 per hr . . . .................................. 11.25 Although 10,000 units were budgeted, only 8,800 units were produced. The purchasing department bought 55,000 pounds of materials at $123,750. Actual pounds of materials used were 54,305. Direct labor cost was $127,400 for 18,200 hours worked. Required: 1. Make journal entries to record the materials transactions, assuming that the materials price variance was recorded at the time of purchase. 2. Make journal entries to record the labor variances
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Suzy-Q Corporation has established the following
per unit:
Materials—5.5 lb @ $2.20 per lb . . . ............................... $12.10
Labor—1.8 hr @ $6.25 per hr . . . .................................. 11.25
Although 10,000 units were budgeted, only 8,800 units were
produced.
The purchasing department bought 55,000 pounds of materials at $123,750. Actual pounds of materials used were
54,305. Direct labor cost was $127,400 for 18,200 hours worked.
Required:
1. Make
assuming that the materials price variance was recorded at
the time of purchase.
2. Make journal entries to record the labor variances
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