When a Journal Entry Is Made in a Standard Cost

question 143

Multiple Choice

When a journal entry is made in a standard cost system to record the liability for direct manufacturing labour costs, the difference between the debit to the work-in-process control account and the credit to the payroll payables is

• A)only the efficiency variance.
• B)only the rate variance.
• C)the difference between the actual wage rate and the budgeted rate, times the actual hours.
• D)the difference between the actual wage rate and the budgeted rate, times the budget hours.
• E)the total of the price and efficiency labour variances.

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Definitions:

Debts

Money, goods, or services owed by one party to another under the terms of a contract or agreement.

Garnishments

A legal process whereby a creditor can collect what a debtor owes by requiring a third party to turn over the debtor’s property or wages.

Creditors

Individuals or institutions that lend money or extend credit and are owed repayment by debtors.

Involuntary Bankruptcy

A legal proceeding initiated by creditors against a debtor who fails to pay owed amounts, forcing the debtor into bankruptcy to satisfy debts.