Figure 10-8

question 150

Multiple Choice

Figure 10-8. The Perfect Tool Company (South America Division) produced 80,000 saw blades during the year.It took 1.5 hours of labor per blade at a rate of $8.50 per hour.However,its standard labor rate is $8.00.Its labor efficiency variance was an unfavorable $40,000.
Refer to Figure 10-8.What is the journal entry to record both labor variances?

• A)Work In Process 920,000 Labor Rate Variance 60,000
• Labor Efficiency Variance 40.000
• Accrued Payroll 1,020,000
• B)Work In Process 960,000 Labor Rate Variance 57,500
• Labor Efficiency Variance 40,000
• Accrued Payroll 1,057,500
• C)Work In Process 920,000 Labor Rate Variance 60,000
• Labor Efficiency Variance 40,000
• Accrued Payroll 940,000
• D)Work In Process 960,000 Labor Rate Variance 57,500
• Labor Efficiency Variance 40,000
• Accrued Payroll 977,500

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Definitions:

Wear-and-Tear Theory

A concept in aging that suggests the body deteriorates progressively due to accumulated damage from environmental factors.

Maximum Life Span

The longest period that members of a species can live under ideal circumstances.

Species

Species refers to a group of living organisms consisting of similar individuals capable of exchanging genes or interbreeding, categorized distinctly from other species by specific common attributes.