Question

Canandaigua Container Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production-engineering staff and the controller. Direct Labor: Direct Material: Quantity, 4 kilograms Quantity, 0.11 hour Price, $0.32 per Rate, $5.50 per hour vile kilogram Actual material purchases amounted to 55,200 kilograms at $0.350 per kilogram. Actual costs incurred in the production of 12,000 units were as follows: Direct labor: $9,492 for 1,680 hours $17,430 for 49,800 Direct material: kilograms

Answer 1

	Direct Material Price var
	Debit($)		Credit($)
Account payable	1656	Cost of goods sold	1656
Total	1656	Total	1656
	Direct Material Quantity var
	Debit($)		Credit($)
Material Inventory	576	Cost of goods sold	576
Total	576	Total	576
	Direct Labour rate var
	Debit($)		Credit($)
Wages payable	252	Cost of goods sold	252
Total	252	Total	252
	Direct Labour Efficency var
	Debit($)		Credit($)
Wages payable	1980	Cost of goods sold	1980
Total	1980	Total	1980
	Wages payable
	Debit($)		Credit($)
Closing Bal	9492	Direct Labour Efficency var	1980
		Direct Labour rate var	252
		Work in process	7260
Total	9492	Total	9492
	Account Payable
	Debit($)		Credit($)
		Material Inventory	17664
Closing Bal	19320	Material Price var	1656
Total	19320	Total	19320
	Work in process
	Debit($)		Credit($)
Material Inventory	15360
Wges payable	7260	Closing Bal	22620
Total	22620	Total	22620
	Raw Material Inventory
	Debit($)		Credit($)
Account payable	17664	Work in process	15360
		Closing Bal	2304
Total	17664	Total	17664
	Cost of goods sold
	Debit($)		Credit($)
Material price Var	1,656
Material Quantity Var	576
Labour Rate Var	252
Labour Efficency Var	1,980	Closing Bal	4464
Total	4,464	Total	4464

Variance Analysis

Direct Material Price variance$/Kilogram				0.35
Standard Material Price$/Kilogram				0.32
Actual Material Purchased(Kilogram)				55,200
Material Price Variance				1,656	Unfavorable
(Actual Price - Standard Price )*Actual Material Purchased
('0.35-0.32)*234000
Material Quantity Variance
Actual cost incurred in Standard production= 12000 Unit
Direct Material Quantity = 4 Kg
Standard Quantity allowed for
Actual Output== Kg(12000*4)				48,000	A
Actual Quantity Used=Kg				49,800	B
Standard Price$ 0.32 / Kg
Material Quantity Variance				576	Unfavorable
Actual Quantity Used=Kg				49,800
Standard Quantity allowed for				48,000
Actual Output== Kg
(49800-48000)*0.32				576
Labour rate Variance
Actual Hr rate $ 9492/1680 hr				5.65
Standard rate				5.5
Actual Hrs worked= hr			1680
Labour rate Variance				252	Unfavorable
(5.65-5.5)*1680
Labour efficiency Variance
Actual cost incurred in Standard production= 12000 Unit
Standard Quantity =0.11 Hr
Standard hrs allowed for actual product				1,320	Hrs
Actual Labour hrs worked				1,680	Hrs
Standard rate $/ hr				5.50
(1680-1320)*5.5
Labour efficiency Variance				1,980	Unfavorable

Accounted JE
	Details		Debit$	Credit$
Price var	Raw material Inventory		17,664
	(55200*$0.32)
	Material price Var		1,656
	Account payable			19,320
	(55200*$0.35)
Quantity Var	Work in process		15360
	48000*0.32
	Material Quantity Var		576
	Raw material Inventory
	49800*0.32			15936
Labour rate & Efficieny	Work in process		7260
Standard hrs allowed for actual product
	(1320*5.50)
	Rate Var		252
	Efficency Var		1,980
	Wages payable
	1680*5.65			9,492
Final entry transfer to Fost of goods sold
	Cost of goods sold		4,464
	Material price Var			1,656
	Material Quantity Var			576
	Labour Rate Var			252
	Labour Efficency Var			1,980