Journalize the following transactions for Shelton, Inc (a) Incurred direct labor costs of $24,300...

Question:

Journalize the following transactions for Shelton, Inc (a) Incurred direct labor costs of $24,300 for 4,590 hours. The standard labor cost was $25,888. (b) Assigned 4,590 direct labor hours costing $24,300 to production. Standard hours were 4,770.

Costing:

Costing is the estimation and predetermined cost for the manufacturing of the single units. The Cost for the product may be direct or indirect. The Cost for the production is included in the marketing price for the commodities.

Answer and Explanation:

1. Journal Entries for the Labor Cost:

Particular L/F Debit Credit
Factory labor Debited - 25888
Labor rate variance - 1588 -
wages payable Credited - - 24300
(Being pay roll for work in Process) - -

Working Note:

Calculation for labor rate variance:

Here,

{eq}\begin {align*} {\rm{LRV}}& = {\rm{Labour}}{\rm{Rate}}{\rm{Variance}}\\ {\rm{AC}}& = {\rm{Actual}}{\rm{Cost}}\\ {\rm{SC}} &= {\rm{Standard}}{\rm{Cost}} \end{align*} {/eq}

{eq}\begin {align*} &{\rm{LRV}} = {\rm{SC}} - {\rm{AC}}\\ &{\rm{LRV}} = 25888 - 24300\\ &{\rm{LRV}} = 1588 \end{align*} {/eq}

Journal Entries for the Labor Cost:

Particular L/F Debit Credit
Work in Process - 26903
Labor efficiency variance - - 1015
Factory Labor credited - - 25888
(Being wages paid) - -

Working Note:

Calculation for work in process:

{eq}\begin {align*} &{\rm {= Standard}}{\rm{Hours}} \times \frac{{{\rm{Standard}}\;{\rm{Cost}}}}{{{\rm{Assigned}}\;{\rm{Hours}}}}\\ &= 4770 \times \frac{{25888}}{{4590}}\\ &= 26903 \end{align*} {/eq}

Calculation for labor Efficiency variance:

{eq}\begin{align*} &= {\rm{Actual}}{\rm{cost}} - {\rm{Standardost}}\\ &= 26903 - 25888\\ &= 1015 \end{align*} {/eq}


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