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 Direct Labor Rate Variance $1,270 800 Direct Labor Efficiency Variance $12,760 Unadjusted Cost of Goods Sold equals $1,540,000, unadjusted Work in Process equals $256,000, and unadjusted Finished Goods equals $200,000. 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 26,510 Direct Materials Price Variance 13,750 Direct Labor Efficiency Variance 12,760 Close variances with debit balance Direct Materials Usage Variance 1,270 30 Direct Labor Rate Variance 800 Cost of Goods Sold 2,070 Close variances with credit balance 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 $132,000. 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) Direct Materials Usage Variance 1,270 Direct Labor Rate Variance 800 Cost of Goods Sold 2,070 (b) Cash X 311 III will lli illi lill (c) Cash X Direct Labor Rate Variance X 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 259,227 x Finished Goods 202,511 X Cost of Goods Sold 1,560,705 X