Chapter 7 - Flexible Budgets, Direct-Cost Variances, and Management Control - Assignment Material - Problems - Page 283: 7-37(2)

Journal Entries for Variances: To record the variances in the accounting books: For the Wool Price Variance (Favorable): Debit: Cost of Goods Sold: \$2,900 Credit: Raw Materials Inventory: \$2,900 For the Wool Efficiency Variance (Unfavorable): Debit: Cost of Goods Sold: \$2,700 Credit: Raw Materials Inventory: \$2,700 For the Direct Manufacturing Labor Price Variance (Unfavorable): Debit: Cost of Goods Sold: \$300 Credit: Wages Payable: \$300 For the Direct Manufacturing Labor Efficiency Variance (Favorable): Debit: Cost of Goods Sold: \$180 Credit: Wages Payable: \$180

Journal Entries for Variances: To record the variances in the accounting books: For the Wool Price Variance (Favorable): Debit: Cost of Goods Sold: \$2,900 Credit: Raw Materials Inventory: \$2,900 For the Wool Efficiency Variance (Unfavorable): Debit: Cost of Goods Sold: \$2,700 Credit: Raw Materials Inventory: \$2,700 For the Direct Manufacturing Labor Price Variance (Unfavorable): Debit: Cost of Goods Sold: \$300 Credit: Wages Payable: \$300 For the Direct Manufacturing Labor Efficiency Variance (Favorable): Debit: Cost of Goods Sold: \$180 Credit: Wages Payable: \$180