Question

Journal entry worksheet 2 Record the entry for direct materials costs and variances. Note: Enter debits before credits Transaction General Journal Debit Credit 1

Answer 1

1)

WHERE ;

SP = STANDARD PRICE

AP = ACTUAL PRICE

SQ= STANDARD QUANTITY

AQ= ACTUAL QUANTITY

SH = STANDARD HOURS

AH = ACTUAL HOURS

SR = STANDARD RATE

AR = ACTUAL RATE

Materials Price Variance	$2600	UNFAVOURABLE
Materials Usage Variance	$15422.4	UNFAVOURABLE

direct material price variance = AQ ( SP - AP )

= 5200 sq. ft( $5.1 - $5.6 )

= 5200 sq. ft ( (-)$0.5 )

=(-) $2600 UNFAVOURABLE

direct materials usage variance = SP ( SQ - AQ )

= $5.1 ( 2176sq. ft-5200sq. ft )

= $0.40 ( (-700 pounds ) )

= (-) $15422.4 UNFAVOURABLE

NOTE: STANDARD QUANTITY CALCULATION = 170units * 12.8sq. ft

= 2176sq. ft

total direct materials variance = ( SQ*SP - AQ*AP )

= (2176sq. ft* $5.1 – 5200sq. ft* $5.6)

= ( $11097.6 - $29120 )

= (-) $18022.4 UNFAVOURABLE

a)

	DIRECT MATERIAL PRICE VARIANCE JOURNAL
ACCOUNT					DEBIT	CREDIT
RAW MATERIAL INVENTORY					26520
DIRECT MATERIAL PRICE VARIANCE ACCOUNT					2600
ACCOUNTS PAYABLE						29120
TOTAL					29120	29120

b)

	Direct materials usage variance journal
Account					Debit	Credit
Work in process inventory					11097.6
Raw materials inventory						26520
Direct materials quantity variance account					15422.4
Total					26520	26520

2)

Labor Rate Variance	$1212.4	UNFAVOURABLE
Labor Efficiency Variance	$910	FAVOURABLE

direct labour rate variance = ( SR - AR ) AH

= ( $13 - $13.70 ) 1732 hrs

= ( (-)$0.7 ) 1732hrs

= (-) $1212.4 UNFAVOURABLE

= direct labour Efficiency variance = ( SH - AH ) SR

= ( 1802hrs - 1732hrs ) $13

= (-) 70hrs * $13

= $910 FAVOURABLE

NOTE: STANDARD HOURS = 10.6 HOURS * 170 UNITS

= 1802 HOURS

total direct labour variance = ( SH*SR - AH*AR )

= ( 18020hrs*$13 - 1732hrs*13.70 )

= ( $23426 - $23728.4 )

= (-) $302.4 UNFAVOURABLE

a)

ACCOUNT					DEBIT	CREDIT
WORK IN PROCESS INVENTORY					23426
DIRECT LABOUR PRICE VARIANCE ACCOUNT					1212.4
DIRECT LABOUR EFFICIENCY VARIANCE ACCOUNT						910
WAGES PAYABLE						23728.4
TOTAL					24638.4	24638.4