The Odle Company makes and sells a single product called a Kitt. Odle uses a standard costing system. Each Kitt has a standard cost of 5 pounds of material at $12 per pound and 0.9 direct labor-hours at $15 per hour. There were no inventories of any kind on June 1. During June, the following events occurred:

• Purchased 17,000 pounds of material at a total cost of $190,000.
• Used 15,000 pounds of material to produce 2,400 Kitts.
• Used 1,900 hours of direct labor time at a total cost of $38,000.
-To record the incurrence of direct labor cost and its use in production,the general ledger would include what kind of entry to the Labor Rate Variance account?
A)$9,500 credit
B)$9,500 debit
C)$15,200 debit
D)$2,000 debit

Question

The Odle Company makes and sells a single product called a Kitt. Odle uses a standard costing system. Each Kitt has a standard cost of 5 pounds of material at $12 per pound and 0.9 direct labor-hours at $15 per hour. There were no inventories of any kind on June 1. During June, the following events occurred:

• Purchased 17,000 pounds of material at a total cost of $190,000.
• Used 15,000 pounds of material to produce 2,400 Kitts.
• Used 1,900 hours of direct labor time at a total cost of $38,000. 
-To record the incurrence of direct labor cost and its use in production,the general ledger would include what kind of entry to the Labor Rate Variance account?
A)$9,500 credit
B)$9,500 debit
C)$15,200 debit
D)$2,000 debit

Quizplus · Accepted Answer

The labor rate variance is a type of manufacturing overhead cost that measures the difference between the expected cost of direct labor and the actual cost of direct labor incurred in the production process. Since direct labor is a cost incurred, it will be recorded as a debit to the corresponding account, in this case, the Labor Rate Variance account. Therefore, the correct entry would be a debit of $9,500, not a credit. Choices A, C, and D do not reflect this approach.

The Odle Company Makes and Sells a Single Product Called