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	$13,750
Direct Materials Usage Variance		$1,170
Direct Labor Rate Variance		840
Direct Labor Efficiency Variance	$12,580

Unadjusted Cost of Goods Sold equals $1,500,000, unadjusted Work in Process equals $256,000, and unadjusted Finished Goods equals $260,000.

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 SoldDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage Variance	- Select -	- Select -
	Cost of Goods SoldDirect Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage VarianceWork in Process	- Select -	- Select -
	Direct Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Usage VarianceFinished GoodsWork in Process	- Select -	- Select -
	Close variances with debit balance
	Direct Labor Efficiency VarianceDirect Materials Price VarianceDirect Materials Usage VarianceFinished GoodsWork in Process	- Select -	- Select -
	Direct Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price VarianceFinished GoodsWork in Process	- Select -	- Select -
	Cost of Goods SoldDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage Variance	- Select -	- Select -
	Close variances with credit balance

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

$fill in the blank cbf15401df9f05c_1

2. What if any ending balance in a variance account that exceeds $12,000 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 $1,060,000, the prime cost in Work in Process is $165,200, and the prime cost in Finished Goods is $126,000. 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)	CashDirect Materials Usage VarianceDirect MaterialsFinished GoodsWages Payable	- Select -	- Select -
	CashCost of Goods SoldDirect Labor Rate VarianceDirect Materials Price VarianceDirect Wages	- Select -	- Select -
	CashCost of Goods SoldDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price Variance	- Select -	- Select -
(b)	CashDirect Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage VarianceWork in Process	- Select -	- Select -
	CashDirect Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage VarianceFinished Goods	- Select -	- Select -
	CashCost of Goods SoldDirect Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage Variance	- Select -	- Select -
	Cost of Goods SoldDirect Labor Efficiency VarianceDirect Materials Price VarianceFinished GoodsWork in Process	- Select -	- Select -
(c)	CashDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Usage VarianceWork in Process	- Select -	- Select -
	CashDirect Labor Rate VarianceDirect Materials Price VarianceDirect Materials Usage VarianceFinished Goods	- Select -	- Select -
	CashCost of Goods SoldDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Usage Variance	- Select -	- Select -
	Cost of Goods SoldDirect Labor Efficiency VarianceDirect Labor Rate VarianceDirect Materials Price Variance	- Select -	- Select -

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	$fill in the blank e337c302afc3fc1_1
Finished Goods	$fill in the blank e337c302afc3fc1_2
Cost of Goods Sold	$fill in the blank e337c302afc3fc1_3