Question

Theta Company has the following variances at the end of February:

Material Price Variance	$40 Unfavorable
Material Usage Variance	$215 Unfavorable
Labor Rate Variance	$110 Unfavorable
Labor Efficiency Variance	$345 Unfavorable

Which of the following is the journal entry to be passed by Theta Company at the end of the month of February to close the variances?

a.Debit Cost of Goods Sold, 410<br />Debit Material Price Variance, 40<br />Debit Labor Rate Variance, 110<br />Credit Material Usage Variance, 215<br />Credit Labor Efficiency Variance, 345

b.Debit Cost of Goods Sold, 170<br />Debit Material Price Variance, 40<br />Debit Material Usage Variance, 215<br />Credit Labor Rate Variance, 110<br />Credit Labor Efficiency Variance, 345

c.Debit Cost of Goods Sold, 60<br />Debit, Labor Rate Variance, 110<br />Debit Material Usage Variance, 215<br />Credit Material Price Variance, 40<br />Credit Labor Efficiency Variance, 345

d.Debit Cost of Goods Sold, 710<br />Credit Material Price Variance, 40<br />Credit Material Usage Variance, 215<br />Credit Labor Rate Variance, 110<br />Credit Labor Efficiency Variance, 345

Answer 1

Answer- The following is the journal entry to be passed by Theta Company at the end of the month of February to close the variances =

Explanation-

Date	Accounts Titles & Explanation	Debit	Credit
		$	$
Feb	Cost of goods sold	710
	Material price variance		40
	Material usage variance		215
	Labor rate variance		110
	Labor efficiency variance		345
	(Being entry recorded)