Journal Entries for Direct Labor The AB Company had a standard rate (price)

of $8.00 per direct-labor hour. Actual‘hours in July were 20,526 at an actual price of $7.90 per hour. The standard direct-labor hours allowed for the output achieved were 20,000.

required Prepare general-journal entries that isolate price and efficiency variances. Prepare one eritry whereby Work in Process is carried at standard hours allowed times standard prices. Then prepare a second set of entries whereby

(a) price variances are isolated as labor costs are originally journalized and

(b) efficiency variances are isolated as units are transferred from Work in Process to Finished Goods. lop4