Atlantic Manufacturing Company Uses Standard Costing Methodology in Their Journal

question 6

Multiple Choice

Atlantic Manufacturing Company uses standard costing methodology in their journal entries and accounts. Standards for direct labor are as follows: Actual direct labor for the month: 1,200 hours for a total cost of $24,000
Planned production for the month: 3,000 units
The journal entry to record the payment of direct labor wages would be to:

• A)debit Manufacturing wages $21,600, credit Wages payable $24,000, debit Labor efficiency variance $2,400.
• B)debit Manufacturing wages $24,000, credit Wages payable $21,600, credit Labor price variance $2,400.
• C)debit Manufacturing wages $27,000, credit Wages payable $24,000, credit Labor price variance $3,000.
• D)debit Manufacturing wages $21,600, credit Wages payable $24,000, debit Labor price variance $2,400.

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Definitions:

External Financing

Funding acquired from sources outside the company, such as loans, stock issues, or bonds.