Using the solution to Note 10.40 “Review Problem 10.4”, prepare a journal entry to record direct labor costs.
Review Problem 10.4
Carol’s Cookies expected to use 0.20 direct labor hours to produce 1 unit (batch) of product at a cost of $12 per hour. Actual results are in for last year, which indicates 390,000 batches of cookies were sold. The company’s direct labor workforce worked 97,500 hours at $11 per hour.
1. Calculate the labor rate and efficiency variances using the format shown in.
2. Use the alternative approach to calculating the labor rate and efficiency variances, and compare the result to the result in part 1.
3. Suggest several possible reasons for the labor rate and efficiency variances.