Question

QUESTION 7 Afirm with a standard costing system budgets 4,000 direct labor hours at $20 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?

Answer 1

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A firm
Budgeted Labor Hour per unit
Budgeted Hours	4,000.00	A
Budgeted units	2,000.00	B
Budgeted Labor Hour per unit	2.00	C=A/B
Standard labor cost of actual units
Actual units	3,000.00	D
Budgeted Labor Hour per unit	2.00	See C
Budgeted Labor Hours for actual units	6,000.00	E=D*D
Budgeted Labor Hour rate	20.00	F
Standard labor cost of actual units	120,000.00	G=E*F
So Dollar value of debit to Work-In-Process Inventory is $ 120,000.
Garland Company	Finished Units	Input per unit	Input required	Rate per unit	Amount
Direct Material Usage Variance
Standard Price allowed for Actual Output at Standard Price	1,300.00	3.70	4,810.00	0.71	3,415.10	H
Actual Quantity of Input used at Standard Price			4,100.00	0.71	2,911.00	I
Quantity Variance (I-H)					(504.10)	Favorable
Tolton Inc.	Amount $
Standard Price per pound	13.00	K
Actual Price per pound	11.62	L
Decrease in Price per pound	1.38	M=K-L
Material purchased	4,000.00	N
Total Decrease in material cost	5,520.00	O=M*N
As material cost has decreased, so net income will increase by $ 5,520.