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    Journal Entries For Variances

    Uploaded by

    Muhammad Sadiq
    it is a special topic to deal with Journal entries for Standard costing

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    Journal Entries For Variances

    Uploaded by

    Muhammad Sadiq
    42 views7 pages
    it is a special topic to deal with Journal entries for Standard costing

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    Journal Entries for Variances

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    it is a special topic to deal with Journal entries for Standard costing

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    42 views7 pages

    Journal Entries For Variances

    Uploaded by

    Muhammad Sadiq
    it is a special topic to deal with Journal entries for Standard costing

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 7

    Journal Entries to Record

    Variances
    Appendix 10B

    PowerPoint Authors:
    Susan Coomer Galbreath, Ph.D., CPA
    Charles W. Caldwell, D.B.A., CMA
    Jon A. Booker, Ph.D., CPA, CIA
    Cynthia J. Rooney, Ph.D., CPA
    Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
    10A-2

    Learning Objective 5

    (Appendix 10B)
    Prepare journal entries
    to record standard
    costs and variances.
    10A-3

    Glacier Peak Outfitters ― Revisited


    We will use information from the Glacier Peak Outfitters
    example presented earlier in the chapter to illustrate journal
    entries for standard cost variances. Recall the following:

    Material Labor
    AQ × AP = $1,029 AH × AR = $26,250
    AQ × SP = $1,050 AH × SR = $25,000
    SQ × SP = $1,000 SH × SR = $24,000
    MPV = $21 F LRV = $1,250 U
    MQV = $50 U LEV = $1,000 U

    Now, let’s prepare the entries to record


    the labor and material variances.
    10A-4

    Recording Materials Variances


    GENERAL JOURNAL Page 4
    Post.
    Date Description Ref. Debit Credit
    Raw Materials 1,050
    Materials Price Variance 21
    Accounts Payable 1,029
    To record the purchase of material

    Work in Process 1,000


    Materials Quantity Variance 50
    Raw Materials 1,050
    To record the use of material
    10A-5

    Recording Labor Variances

    GENERAL JOURNAL Page 4


    Post.
    Date Description Ref. Debit Credit
    Work in Process 24,000
    Labor Rate Variance 1,250
    Labor Efficiency Variance 1,000
    Wages Payable 26,250
    To record direct labor
    10A-6

    Cost Flows in a Standard Cost System

    Inventories are recorded at standard cost.


    Variances are recorded as follows:
     Favorable variances are credits, representing
    savings in production costs.
     Unfavorable variances are debits, representing
    excess production costs.
    Standard cost variances are usually closed out
    to cost of goods sold.
     Unfavorable variances increase cost of goods sold.
     Favorable variances decrease cost of goods sold.
    10A-7

    End of Appendix 10B

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