Exercise 17-18 (Static) Prorating Direct Labor Cost Variances (LO 17-1) Cook Company processes and packages frozen seafood. The year just ended was Cook's first year of business and they are preparing financial statements. The immediate issue facing Cook is the treatment of the direct labor costs. Cook set a standard at the beginning of the year that allowed two hours of direct labor for each unit of output. The standard rate for direct labor is $27 per hour. During the year, Cook processed 60,000 units of seafood for the year, of which 4,800 units are in ending finished goods. (There are no work-in-process inventories). Cook used 123,500 hours of labor. Total direct labor costs paid by Cook for the year amounted to $3,087,500. Required: a. & b. What was the direct labor price variance and the direct labor efficiency variance for the year? c. Assume Cook writes off all variances to Cost of Goods Sold. Prepare the entries Cook would make to record and close out the variances. d. Assume Cook prorates all variances to the appropriate accounts. Prepare the entries Cook would make to record and close out the variances.

Complete this question by entering your answers in the tabs below. Req A and B Reqc ReqD Assume Cook writes off all variances to Cost of Goods Sold. Prepare the entries Cook would make to record and close out the variances. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet No Event Credit Debit 247,000 A 1 General Journal Direct labor price variance Direct labor efficiency variance Cost of goods sold 94,500 152,500 Required: a. & b. What was the direct labor price variance and the direct labor efficiency variance for the year? C. Assume Cook writes off all variances to Cost of Goods Sold. Prepare the entries Cook would make to record and close out the variances. d. Assume Cook prorates all variances to the appropriate accounts. Prepare the entries Cook would make to record and close out the variances. Complete this question by entering your answers in the tabs below. Req A and B Reqc Reg D Assume Cook prorates all variances to the appropriate accounts. Prepare the entries Cook would make to record and close out the variances. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet No Event Debit Credit A 1 247,000 General Journal Direct labor price variance Direct labor efficiency variance Cost of goods sold Finished goods inventory 94,500 140,300 12,200 B 2 No journal entry required 247