To record the incurrence of direct labour costs and its use in production,the general ledger would include what entry to the labour efficiency variance account?
A) $240 debit.
B) $480 credit.
C) $1,200 debit.
D) $1,200 credit.

Question

Quizplus · Accepted Answer

Since the question asks about the entry to the labour efficiency variance account, it suggests that the company is using a standard cost system to track the difference between the actual and standard amounts of labour used in production. The labour efficiency variance represents the difference between the actual hours worked and the standard hours allowed for the production output achieved. If actual hours worked are greater than standard hours allowed, the variance is unfavorable (debit balance). The entry to record direct labour costs incurred during production would be a debit to the Work-in-Process account and a credit to the Wages Payable account. Therefore, the entry to the labour efficiency variance account would be a debit to increase the variance account, and the debit amount should equal the unfavorable variance. Choice A is the only option that represents the entry of an unfavorable labour efficiency variance of $240, which means that actual labour hours used were 240 more than the standard allowed for the actual level of production.

To Record the Incurrence of Direct Labour Costs and Its