Question

The Assembly Department produced 4,000 units of product during March. Each unit required 1.5 standard direct labor hours. There were 6,400 actual hours used in the Assembly Department during March at an actual rate of $14.5 per hour. The standard direct labor rate is $15.5 per hour.

Assuming direct labor for a month is paid on the fifth day of the following month, journalize the direct labor in the Assembly Department on March 31. For a compound transaction, if an amount box does not require an entry, leave it blank.

March 31

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Answer 1

Date	Accounts Titles & Explanation	Debit ($)	Credit ($)
March 31	Work in Progess [ 4,000 units * 1.5 hrs * $15.5 ]	93,000
	Direct Labour Time variance [Working Note 1]	6,200
	Direct Labour Rate variance [Working Note 2]		6,400
	Wages Payable [ 6,400 hrs * $14.5 ]		92,800
	[ To record direct Labour]

Working Note 1 : Direct Labour Time variance = ( Actual hrs worked - Standard hrs) * Standard direct labor rate

= [ 6,400 hrs - (4,000 units * 1.5 hrs)] * $15.5 = $6,200 U

Working Note 2 : Direct Labour Rate variance = (Actual direct labor rate - Standard direct labor rate) * Actual hrs worked

= ($14.5 - $15.5) * 6,400 hrs = $6,400 F