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# Managerial Accounting ed 15 Chapter 10B

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Managerial Accounting ed 15 Chapter 10B

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### Managerial Accounting ed 15 Chapter 10B

1. 1. PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D., CPA Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Journal Entries to Record Variances Appendix 10B
2. 2. 10A-2 Learning Objective 5 (Appendix 10B) Prepare journal entries to record standard costs and variances.
3. 3. 10A-3 Glacier Peak Outfitters ― Revisited We will use information from the Glacier Peak Outfitters example presented earlier in the chapter to illustrate journal entries for standard cost variances. Recall the following: Material AQ × AP = \$1,029 AQ × SP = \$1,050 SQ × SP = \$1,000 MPV = \$21 F MQV = \$50 U Labor AH × AR = \$26,250 AH × SR = \$25,000 SH × SR = \$24,000 LRV = \$1,250 U LEV = \$1,000 U Now, let’s prepare the entries to record the labor and material variances.
4. 4. 10A-4 GENERAL JOURNAL Page 4 Date Description Post. Ref. Debit Credit Raw Materials 1,050 Materials Price Variance 21 Accounts Payable 1,029 To record the purchase of material Work in Process 1,000 Materials Quantity Variance 50 Raw Materials 1,050 To record the use of material Recording Materials Variances
5. 5. 10A-5 GENERAL JOURNAL Page 4 Date Description Post. Ref. Debit Credit Work in Process 24,000 Labor Rate Variance 1,250 Labor Efficiency Variance 1,000 Wages Payable 26,250 To record direct labor Recording Labor Variances
6. 6. 10A-6 Cost Flows in a Standard Cost System Inventories are recorded at standard cost. Variances are recorded as follows:  Favorable variances are credits, representing savings in production costs.  Unfavorable variances are debits, representing excess production costs. Standard cost variances are usually closed out to cost of goods sold.  Unfavorable variances increase cost of goods sold.  Favorable variances decrease cost of goods sold. Inventories are recorded at standard cost. Variances are recorded as follows:  Favorable variances are credits, representing savings in production costs.  Unfavorable variances are debits, representing excess production costs. Standard cost variances are usually closed out to cost of goods sold.  Unfavorable variances increase cost of goods sold.  Favorable variances decrease cost of goods sold.
7. 7. 10A-7 End of Appendix 10B