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 $14,450 Direct Materials Price Variance Direct Materials Usage Variance Direct Labor Rate Variance Direct Labor Efficiency Variance $1,100 820 $12,940 Unadjusted Cost of Goods Sold equals $1,530,000, unadjusted Work in Process equals $306,000, and unadjusted Finished Goods equals $280,000. 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 "o". Cost of Goods Sold 27,390 Direct Materials Price Variance 14,450 Direct Labor Efficiency Variance 12,940 Close variances with debit balance Direct Materials Usage Variance 1.100 Direct Labor Rate Variance 820 Cost of Goods Sold 1,920 What is the adjusted balance in Cost of Goods Sold after closing out the variances? 1,559,310 x Feedback Check My Work 2. What if any ending balance in a variance account that exceeds $11,000 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 $163,600, and the prime cost in Finished Goods is $132,000. If all amount box does not require an entry, leave it blank or enter "O". 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) Direct Materials Usage Variance 1,100 Direct Labor Rate Variance det 820 Cost of Goods Sold 1,920 IV DIT (b) Work in Process 1,562 Finished Goods 1,260 x Cost of Goods Sold 10,118 X entry (a) Direct Materials Usage Variance 1,100 Direct Labor Rate Variance 820 Cost of Goods Sold 1,920 (b) Work in Process IIIII 1,562 X Finished Goods 1.260 X Cost of Goods Sold 10,118 X Direct Labor Efficiency Variance 12,940 (c) Work in Process 1,744 X Finished Goods 1,407 X Cost of Goods Sold 11,299 X Direct Materials Price Variance 14,450 Feedback Check My Work See Cornerstone 9.5. (c) Work in Process 1,744 X Finished Goods 1,407 X Cost of Goods Sold 11,299 X Direct Materials Price Variance 14,450 Feedback Check My Work 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 II Cost of Goods Sold
