Naches Co Assigned Direct Labor Cost to Its Products in May

question 159

Essay

Naches Co. assigned direct labor cost to its products in May for 1,300 standard hours of direct labor at the standard $8 per hour rate. The direct labor rate variance for the month was $200 favorable and the direct labor efficiency variance was $150 favorable. Prepare the journal entry to charge Work in Process Inventory for the standard labor cost of the goods manufactured in May and to record the direct labor variances. Assuming that the direct labor variances are immaterial, prepare the journal entry that Naches would make to close the variance accounts.

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Definitions:

China

A country in East Asia, the world's most populous nation, known for its significant influence in terms of culture, economy, and politics.

Managed Float

A currency exchange rate policy that allows a country's currency value to fluctuate in response to the foreign exchange market, but with central bank interventions to stabilize it when necessary.

Exchange Rate System

The mechanism by which a country manages its currency in relation to other currencies, involving policies on currency valuation, exchange regimes, and market conditions.

Central Banks

Institutions that manage a country's currency, money supply, and interest rates. They oversee the commercial banking system of their respective countries.