Bliny Corporation makes a product with the following standard costs for direct material and direct labor:
| Direct material: 1.80 meters at $5.70 per meter | $ | 10.26 |
| Direct labor: .20 hours at $13.00 per hour | $ | 2.60 |
| During the most recent month, 7,500 units were produced. The costs associated with the month’s production of this product were as follows: |
| Material purchased: 14,900 meters at $5.50 per meter | $ | 81,950 |
| Material used in production: 13,600 meters | – | |
| Direct labor: 1,450 hours at $13.20 per hour | $ | 19,140 |
| The standard cost variances for direct material and direct labor are: |
| Materials price variance: 14,900 meters at $0.20 per meter F | $ | 2,980 | F |
| Materials quantity variance: 100 meters at $5.70 per meter U | $ | 570 | U |
| Labor rate variance: 1,450 hours at $0.20 per hour U | $ | 290 | U |
| Labor efficiency variance: 50 hours at $13 per hour F | $ | 650 | F |
| Required: | |
| 1. | Prepare the journal entry to record the purchase of materials on account for the month. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.) |
| 2. | Prepare the journal entry to record the use of materials for the month. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.) |
| 3. | Prepare the journal entry to record the incurrence of direct labor cost for the month. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.) |
Answer:
| Number | Description | Debit $ | Credit $ |
| 1 | Raw Materials (14900 meters at $5.70 per meter) |
84930 | |
| Materials Price Variance | 2980 | ||
| (14900 meters at $0.20 per meter F) | |||
| Accounts Payable | 81950 | ||
| (14900 meters at $5.5 per meter) | |||
| 2 | Work in Process | 84360 | |
| (14800 meters at $5.7 per meter) | |||
| Materials Quantity Variance | 570 | ||
| (100 meters at $5.7 per meter U) | |||
| Raw Materials | |||
| (14900 meters at $5.7 per meter) | 84930 | ||
| 3 | Work in Process | 19500 | |
| (1500 hours at $13.00 per hour) | |||
| labor Rate Variance | 290 | ||
| (1450 hours at $0.20 per hour U) | |||
| Labor Efficiency Variance | 650 | ||
| (50 hours at $13.00 per hour F) | |||
| Wages Payable | 19140 | ||
| (1,450 hours at $13.20 per hour) |
