Journal entries for materials and labor variances Karl Corp, which uses a standa
ID: 2498504 • Letter: J
Question
Journal entries for materials and labor variances Karl Corp, which uses a standard cost accounting system, determines that the following variances arose in production during June: Direct materials purchases totaled $90.000 at standard cost, while $75,000 in materials were taken from inventory for use in production Actual direct labor touted $80,000. while actual overhead incurred was $60,000. (Assume no variance for factory overhead.) Ten thousand units were transferred to Finished . Goods at a standard cost of $15 per unit. Prepare the journal entries to record The purchase of materials (The materials price variance is recorded at the time of purchase ) The use of materials in production The use of labor in production The charging of overhead to production The transfer of finished goods to the storeroomExplanation / Answer
Direct Material Dr 90,000
To Direct Material Price Variance 900
To Accounts Payable 89,100
Work in Progress Dr 75,000
Direct Material Quantity Variance Dr 750
To Direct Material 75,750
Work in Progress Dr 78,400
Direct Labour Rate Variance Dr 600
Direct Labour Efficiency variance Dr 1,000
To Wages Payable 80,000
Work in Progress Dr 60,000
To Manufacturing Overheads 60,000
Finished Goods Inventory Dr 1,50,000
To Work in Progress 1,50,000
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