Eagle Company uses a standard cost system which has provided the following data:

Question

Eagle Company uses a standard cost system which has provided the following data: Units of output manufactured: 85 Direct labor: Standard hours allowed: 2 hours per unit of product Standard wage rate: $15.10 per hour Actual direct labor: 190 hours, total cost of $3,249

$682 favorable.

$380 favorable.

$380 unfavorable.

$682 unfavorable.

The journal entry to record the cost of direct labor used in this period includes:

A debit to Work in Process Inventory of $2,869.

A debit to Work in Process Inventory of $2,567.

A credit to Direct Labor Rate Variance of $380.

A credit to Direct Labor Rate Variance of $302.

$380 favorable.

$380 unfavorable.

$302 favorable.

$302 unfavorable.

Explanation / Answer

Direct labour rate variance=AQ*(AR-SR)
=85*(3249-(2*85*15.1))
=$682 unfavourable

2)
Debit to work in progress inventory =(2*85*15.1)
=$2567

3)Direct labor efficency=SR*(AH-SH)
=15.1*(190-(85*2))
=$302 Unfavourable

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.