Two journals required for C and D: (second journal for c is only cost of goods sold; second journal for D is only finished goods inventory)

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.

Direct labor price variance	$247,000	F
Direct labor efficiency variance	$94,500	U

Required:

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.

No	Event	General Journal	Debit	Credit
A	1
		Direct labor efficiency variance
B	2

D. Assume Cook prorates all variances to the appropriate accounts. Prepare the entries Cook would make to record and close out the variances.

No	Event	General Journal	Debit	Credit
A	1
		Direct labor efficiency variance selected answer correct
B	2