Boss Company’s standard cost accounting system recorded this information from

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 variances that would attract the attention of a manager who uses management by exception. Explain what action(s) the manager should consider.