Chapter 10 Appendix B Journal Entries to Record Variances
Chapter 10 Appendix B Journal Entries to Record Variances Key
True / False Questions
1. Although formal entry of standard costs and variances into the accounting records is not
required, some organizations make such entries in order to emphasize the importance of
variances as well as to simplify the bookkeeping process.
2. A favorable labor efficiency variance is recorded as a credit in the Labor Efficiency
Variance account.
3. A favorable labor rate variance is recorded as a debit in the Labor Rate Variance account.
Chapter 10 Appendix B Journal Entries to Record Variances
4. An unfavorable materials quantity variance is recorded as a credit in the Materials Quantity
Variance account.
Chapter 10 Appendix B Journal Entries to Record Variances
5. If the actual purchase price for materials exceeds the standard purchase price, then the
journal entry to record the Direct Materials Price Variance would be a debit.
6. If the actual rate per direct labor-hour exceeds the standard rate per direct labor-hour, then
the journal entry to record the Direct Labor Rate Variance would be a credit.
7. If the actual quantity of materials used is less than the standard quantity of materials
allowed for the actual output, then the journal entry to record the Direct Materials Quantity
Variance would be a credit.
Chapter 10 Appendix B Journal Entries to Record Variances
8. If the actual direct labor-hours used is less than the standard direct labor-hours allowed for
the actual output, then the journal entry to record the Labor Efficiency Variance would be a
debit.
Multiple Choice Questions
9. When the actual amount of a raw material used in production is greater than the standard
amount allowed for the actual output, the journal entry would include:
Chapter 10 Appendix B Journal Entries to Record Variances
10. Dolittle Company purchased materials on account. The entry to record the purchase of
materials having a standard cost of $0.50 per pound from a supplier at $0.60 per pound would
include a:
11. Which of the following entries would correctly record charging direct labor costs to Work
in Process, given an unfavorable labor efficiency variance and a favorable labor rate
variance?
Chapter 10 Appendix B Journal Entries to Record Variances
12. When the actual direct labor-hours exceeds the standard direct labor-hours allowed for the
actual output of the period, the journal entry would include:
13. When the actual direct labor-hours is less than the standard direct labor-hours allowed for
the actual output of the period, the journal entry would include:
14. Ciubal Corporation has provided the following data concerning its direct labor costs for
December:
The Labor Rate Variance for December would be recorded as a:
Chapter 10 Appendix B Journal Entries to Record Variances
15. Gotay Corporation’s standard wage rate is $12.00 per direct labor-hour (DLH) and
according to the standards, each unit of output requires 5.8 DLHs. In December, 4,900 units
were produced, the actual wage rate was $11.00 per DLH, and the actual hours were 27,870
DLHs. The Labor Rate Variance for December would be recorded as a:
Chapter 10 Appendix B Journal Entries to Record Variances
16. Forker Corporation has provided the following data concerning its direct labor costs for
April:
The Labor Efficiency Variance for April would be recorded as a:
Chapter 10 Appendix B Journal Entries to Record Variances
17. Denise Corporation’s standard wage rate is $14.40 per direct labor-hour (DLH) and
according to the standards, each unit of output requires 7.0 DLHs. In May, 5,200 units were
produced, the actual wage rate was $13.70 per DLH, and the actual hours were 36,520 DLHs.
The Labor Efficiency Variance for May would be recorded as a:
Chapter 10 Appendix B Journal Entries to Record Variances
18. At the end of the year, a company’s Manufacturing Overhead account contained the
following data:
If the denominator activity for the year was 40,000 machine-hours, and if 36,400 machine-
hours were allowed for the year’s production, then the predetermined overhead rate per
machine-hour was:
Chapter 10 Appendix B Journal Entries to Record Variances
19. Raybould Corporation has provided the following data concerning its most important raw
material, compound M31P:
When recording the purchase of materials, Raw Materials would be:
Chapter 10 Appendix B Journal Entries to Record Variances
20. Durrant Corporation has provided the following data concerning its most important raw
material, compound O96H:
When recording the use of materials in production, Raw Materials would be:
Chapter 10 Appendix B Journal Entries to Record Variances
21. Compound V11V is used to make Hickenbottom Corporation’s major product. The
standard cost of V11V is $21.50 per ounce and the standard quantity is 3.6 ounces per unit of
output. In the most recent month, 1,600 ounces of the raw material were purchased at a cost of
$21.00 per ounce. When recording the purchase of materials, Raw Materials would be:
Chapter 10 Appendix B Journal Entries to Record Variances
22. Compound K47E is used to make Goforth Corporation’s major product. The standard cost
of compound K47E is $24.50 per ounce and the standard quantity is 6.1 ounces per unit of
output. In the most recent month, 5,030 ounces of the compound were used to make 700 units
of the output. When recording the use of materials in production, Raw Materials would be:
Chapter 10 Appendix B Journal Entries to Record Variances
23. Data concerning the direct labor costs for April of Dimaio Corporation appear below:
The journal entry to record the incurrence of direct labor costs in April would include the
following for Work in Process:
Chapter 10 Appendix B Journal Entries to Record Variances
10B–19
24. Stanfa Corporation’s standard wage rate is $10.50 per direct labor-hour (DLH) and
according to the standards, each unit of output requires 8.0 DLHs. In January, 3,700 units
were produced, the actual wage rate was $10.80 per DLH, and the actual hours were 25,280
DLHs. In the journal entry to record the incurrence of direct labor costs in January, the Work
in Process entry would consist of a:
The Odle Company makes and sells a single product called a Kitt. Odle uses a standard
costing system. Each Kitt has a standard cost of 5 pounds of material at $12 per pound and 0.9
direct labor-hours at $15 per hour. There were no inventories of any kind on June 1. During
June, the following events occurred:
• Purchased 17,000 pounds of material at a total cost of $190,000.
• Used 15,000 pounds of material to produce 2,400 Kitts.
• Used 1,900 hours of direct labor time at a total cost of $38,000.
Chapter 10 Appendix B Journal Entries to Record Variances
25. To record the incurrence of direct labor cost and its use in production, the general ledger
would include what kind of entry to the Labor Rate Variance account?
Chapter 10 Appendix B Journal Entries to Record Variances
26. To record the incurrence of direct labor cost and its use in production, the general ledger
27. Odle Company purchased material on account. The entry to record the purchase of
materials will include a:
Chapter 10 Appendix B Journal Entries to Record Variances
28. To record the purchase of direct materials, the general ledger would include what kind of
entry to the Materials Price Variance Account?
29. To record the use of direct materials in production, the general ledger would include what
kind of entry to the Materials Quantity Variance Account?