A firm with a standard costing system budgets 5,000 direct labor hours at $21 pe

Question

A firm with a standard costing system budgets 5,000 direct labor hours at $21 per hour to make 2,000 units. The firm actually produced 3,000 units using 7,000 direct labor hours at $24 per hour. When labor occurred during the period, what was the total dollar value of the debit to Work-in-Process Inventory?

Tolton, Inc. is just shy of hitting its operating income target. The manager, K.T. Tolton, decides to purchase inferior materials right before year end. The standard price for the materials is $14.00 per pound. K.T. buys 4,000 pounds of inferior product at $11.18 per pound. What is the effect on net income for the year? Please sign an increase as a positive number (e.g. 100) and a decrease as a negative number (e.g. -100).

A firm with a standard costing system budgets 4,000 direct labor hours at $20 per hours to make 2,000 units. The firm actually produced 3,000 units using 6,000 direct labor hours at $20 per hour. When labor occurred during the period, what was the total dollar value of the credit to wages payable?

Elisabeth Company’s unadjusted COGS for 20X1 was $84,000. They had a $4,000 unfavorable direct labor efficiency variance, a $1,000 favorable direct labor rate variance, a $3,000 unfavorable direct materials purchase price variance, and a $4,000 unfavorable direct materials usage variance. They did not have any overhead variances. What was Elisabeth Company’s adjusted COGS amount for 20X1?

Explanation / Answer

1) The total amount in dollars to be debited to WIP inventory under a standard costing system, is the standard labor cost, with the variances being debited or credited as the case may be. The amount debited = 3000 units*2.5 DLH * $21 per hour = $   157,500.00 Answer Note: Standard Labor hours per unit = 5000 hours/2000 units = 2.5 hours. 2) If material price variance is accounted for at the time of purchase, the effect on operating income = Quantity purchased*(Standard price-Actual price) = 4000*(14.00-11.18) = $     11,280.00 Answer 3) Wages payable is o be credited with the actual amount payable = 6000*$20 = $   120,000.00 Answer 4) Adjusted COGS would be: Unadjusted COGS 84000 Add: Unfavorable variances = 4000+3000+4000 = 11000 Less: Favorable variances = 1000 = 1000 Adjusted COGS 94000 Answer

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