Summarizing labor costs, efficiency and rate variances, and labor variances. In the Finishing Department of the Paxton Tank Corporation,

two classes of direct labor are used in the manufacturing process. Standard labor costs have been established for each unit of the product as follows:

Instructions 1. Prepare a summary of labor costs for the month of May (Exhibit 4). Show whether the variances are favorable (F) or unfavorable (U).
2. Compute the efficiency and rate variances for each class ‘of labor.
3. Prepare a labor variances summary for the month (Exhibit 5).
4. Give the general journal entry on May 31, 19X1, to charge the standard labor cost to Work in Process, to remove the actual cost of labor used from the Factory Payroll Clearing account, and to record the labor efficiency and labor rate variances.
Use Work in Process—Finishing Department 123.

Transcribed Image Text:

Standard Standard Rate Labor Class Class FL-3 Hours per Hour 1hr $10.40 Class FL-4 2 hr 9.60 During the month of May 19X1, a total of 2,836 units were produced. The actual labor costs, by class, were as follows: Labor Class Hours Cost Class FL-3 716 $ 7,876.00 Class FL-4 5,512 52,915.20