Injin Inc., which produces a single product, has prepared the following standard
ID: 2479165 • Letter: I
Question
Injin Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product.
During the month of April, the company manufactures 220 units and incurs the following actual costs.
Instructions
Journalize the entries to record the materials and labor variances.
(To record materials price variance)
To record materials quantity variance)
(To record labor price variance)
(To record labor quantity variance)
Direct materials (9 pounds at $2.40 per pound) $22 Direct labor (2.9 hours at $12.50 per hour) $36Explanation / Answer
Materia Price per pound=Material cost/No of pounds of material used=$5,670/2,100=$2.7
Direct Material Price variane=AQ(SP-AP)=2,100($2.40-$2.7)=2,100*$0.3=-$600
Direct material Quantity Variance=SR(SQ-AQ)=$2.4(200*9-2,100)=-$720
Labour Over head variance:
Actual labour rate per hour=$7,499/688=$10.9
Labour price variance=AH(SR-AR)=688($12.50-10.9)=$1,100.8
Labour efficiency variance=SR(SH-AH)=$12.50(200*2.99-688)=$12.5*(-108)=-$1,350
S.No Account Title Debit Credit 1 Direct Materials 5,040 Direct material price variance 630 Accounts payable 5,670 2 Work in process 5,760 Direct material quantity variance 720 Direct Materials 5,040 3 Work in process 7,499 Direct labour Price variance 1,101 Direct labour efficiency variance 1,350 Direct labour 7,250