Darren Company adopted a standard cost system several years ago. The standard costs for the prime costs of its single product are as follows: Material: 8 kilograms @ $5 per kilogram$40.00 Labor: 6 hours @ $8.20 per hour$49.20 The following operating data were taken from the records for November: Units completed 5,600unitsBudgeted output 6,000unitsPurchase of materials 50,000kilogramsTotal actual labor costs$300,760 Actual labor hours 36,500hoursMaterial efficiency (quantity) variance$1,500unfavorableTotal material variance$750unfavorableRequired:Prepare the journal entries to record the following:a. Purchase and use of direct materials (Assume materials are used as purchased and no inventory is maintained).b. Recognition of direct labor.
What will be an ideal response?
a.
| Work-in process inventory (5,600 × $40.00) | 224,000 | |
| Material efficiency variance | 1,500 | |
| Material price variance | 750 | |
| Accounts payable | 224,750 |
b.
| Work-in process inventory (5,600 × $49.20) | 275,520 | |
| Direct labor rate variance | 1,460 | |
| Direct labor efficiency variance | 23,780 | |
| Wages payable | 300,760 |
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