Question

Boss Company’s standard cost accounting system recorded this information from its December operations.
Standard direct materials cost . . . . . . . . . . . . . . . . . . . . . . . $100,000
Direct materials quantity variance (unfavorable) . . . . . . . . 3,000
Direct materials price variance (favorable) . . . . . . . . . . . . . 500
Actual direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000
Direct labor efficiency variance (favorable) . . . . . . . . . . . . 7,000
Direct labor rate variance (unfavorable) . . . . . . . . . . . . . . . 1,200
Actual overhead cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375,000
Volume variance (unfavorable) . . . . . . . . . . . . . . . . . . . . . . 12,000
Controllable variance (unfavorable) . . . . . . . . . . . . . . . . . . . 9,000

Required
1. Prepare December 31 journal entries to record the company’s costs and variances for the month. (Do not prepare the journal entry to close the variances.)
Analysis Component
2. Identify the areas that would attract the attention of a manager who uses management by exception. Explain what action(s) the manager should consider.



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  • CreatedNovember 29, 2013
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