Closing the Balances in The Variance Accounts at the End of the Year

Yohan Company has the following balances in its direct materials and direct labor variance accounts at year-end:

	Debit	Credit
Direct Materials Price Variance	$14,050
Direct Materials Usage Variance		$1,240
Direct Labor Rate Variance		820
Direct Labor Efficiency Variance	$12,880

Unadjusted Cost of Goods Sold equals $1,510,000, unadjusted Work in Process equals $296,000, and unadjusted Finished Goods equals $180,000.

Required:

1. Assume that the ending balances in the variance accounts are immaterial and prepare the journal entries to close them to Cost of Goods Sold. Note: Close the variances with a debit balance first. If an amount box does not require an entry, leave it blank or enter "0".

	Cost of Goods Sold Direct Labor Efficiency Variance Direct Labor Rate Variance Direct Materials Price Variance Direct Materials Usage Variance
	Cost of Goods Sold Direct Labor Rate Variance Direct Materials Price Variance Direct Materials Usage Variance Work in Process
	Direct Labor Efficiency Variance Direct Labor Rate Variance Direct Materials Usage Variance Finished Goods Work in Process
	Close variances with debit balance
	Direct Labor Efficiency Variance Direct Materials Price Variance Direct Materials Usage Variance Finished Goods Work in Process
	Direct Labor Efficiency Variance Direct Labor Rate Variance Direct Materials Price Variance Finished Goods Work in Process
	Cost of Goods Sold Direct Labor Efficiency Variance Direct Labor Rate Variance Direct Materials Price Variance Direct Materials Usage Variance
	Close variances with credit balance

What is the adjusted balance in Cost of Goods Sold after closing out the variances?

$

2. What if any ending balance in a variance account that exceeds $10,000 is considered material? (a) Close the immaterial variance accounts to Cost of Goods Sold. (b) Prorate the largest of the labor variances among Cost of Goods Sold, Work in Process, and Finished Goods on the basis of prime costs in these accounts. (c) Prorate the largest of the material variances among Cost of Goods Sold, Work in Process, and Finished Goods on the basis of prime costs in these accounts. The prime cost in Cost of Goods Sold is $1,050,000, the prime cost in Work in Process is $162,000, and the prime cost in Finished Goods is $134,000. If an amount box does not require an entry, leave it blank or enter "0".

Note: Round all interim calculations to three decimal places, and round your final answers to the nearest dollar. Adjust credit entry for rounding to ensure debits equal credits in journal entry.

(a)	Cash Direct Materials Usage Variance Direct Materials Finished Goods Wages Payable
	Cash Cost of Goods Sold Direct Labor Rate Variance Direct Materials Price Variance Direct Wages
	Cash Cost of Goods Sold Direct Labor Efficiency Variance Direct Labor Rate Variance Direct Materials Price Variance
(b)	Cash Direct Labor Rate Variance Direct Materials Price Variance Direct Materials Usage Variance Work in Process
	Cash Direct Labor Rate Variance Direct Materials Price Variance Direct Materials Usage Variance Finished Goods
	Cash Cost of Goods Sold Direct Labor Rate Variance Direct Materials Price Variance Direct Materials Usage Variance
	Cost of Goods Sold Direct Labor Efficiency Variance Direct Materials Price Variance Finished Goods Work in Process
(c)	Cash Direct Labor Efficiency Variance Direct Labor Rate Variance Direct Materials Usage Variance Work in Process
	Cash Direct Labor Rate Variance Direct Materials Price Variance Direct Materials Usage Variance Finished Goods
	Cash Cost of Goods Sold Direct Labor Efficiency Variance Direct Labor Rate Variance Direct Materials Usage Variance
	Cost of Goods Sold Direct Labor Efficiency Variance Direct Labor Rate Variance Direct Materials Price Variance

What are the adjusted balances in Work in Process, Finished Goods, and Cost of Goods Sold after closing out all variances?

	Adjusted balance
Work in Process	$
Finished Goods	$
Cost of Goods Sold	$