When the direct labor cost is recorded in transaction (c) above, which of the following entries will be made?

A) ($6,150) in the Labor Rate Variance column
B) $6,150 in the Labor Efficiency Variance column
C) $6,150 in the Labor Rate Variance column
D) ($6,150) in the Labor Efficiency Variance column

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Sydnie Souza · Accepted Answer

Final Answer : B, Explanation :  Labor efficiency variance:SH = Actual output × Standard quantity = 31,400 units × 0.80 hours per unit = 25,120 hoursLabor efficiency variance = (AH - SH)× SR= (24,820 hours - 25,120 hours)× $20.50 per hour= (-300 hours)× $20.50 per hour= $6,150 FFavorable variances are entered in the worksheet as positive entries and unfavorable variances as negative entries.Reference: APP10B-Ref12Lakatos Corporation manufactures one product.It does not maintain any beginning or ending Work in Process inventories.The company uses a standard cost system in which inventories are recorded at their standard costs.There is no variable manufacturing overhead.The standard cost card for the company's only product contains the following information concerning direct materials:   During the year, the company completed the following transactions concerning direct materials:a.Purchased 151,800 kilos of raw material at a price of $9.70 per kilo.b.Used 140,870 kilos of the raw material to produce 38,100 units of work in process.The company calculated the following direct materials variances for the year:   Assume that all transactions are recorded on the below worksheet, which is similar to the worksheet shown in your text except that it has been divided into two parts so that it fits on one page.The beginning balances in each of the accounts have been given.PP&E (net)stands for Property, Plant, and Equipment net of depreciation.

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When the direct labor cost is recorded in transaction (c) above, which of the following entries will be made?A) ($6,150) in the Labor Rate Variance columnB) $6,150 in the Labor Efficiency Variance columnC) $6,150 in the Labor Rate Variance columnD) ($6,150) in the Labor Efficiency Variance column

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