ABC company uses a standard costing system. In April 2019, $1,000 of unfavorable price variance and $2,000 of favorable efficiency variance for direct labor were recorded. In addition, the company recorded $2,500 of unfavorable variable overhead flexible budget variance and $3,000 of favorable fixed overhead variance. The company makes year-end adjustments to close all variances into the cost of goods sold account. Which of the following journal entries would have been recorded for April?
A) Debit cost of goods sold for $1,500
B) Debit cost of goods sold for $8,500
C) Credit cost of goods sold for $1,500
D) Credit direct labor efficiency variance for $2,000
Correct Option C) Credit cost of goods sold for $1,500 | |||
Followinh entry would be passed: | |||
Accounts Title and Explanation | Debit | Credit | |
Labor efficiency variance | 2,000 | ||
Fixed Overehead variance | 3,000 | ||
Labor price variance | 1,000 | ||
Variable Overhead Variance | 2,500 | ||
Cost of Goods sold | 1,500 | ||
(To record closing of variance account) | |||
Get Answers For Free
Most questions answered within 1 hours.