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25 votes
25 votes
Theta Company has the following variances at the end of February:

Material Price Variance $40 Unfavorable
Material Usage Variance $225 Unfavorable
Labor Rate Variance $110 Unfavorable
Labor Efficiency Variance $335 Unfavorable

What is the journal entry to be passed by Theta Company at the end of the month of February to close the variances?

User Utkal Sinha
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1 Answer

16 votes
16 votes

Answer:

Debit Cost of Goods Sold $710

Credit Material Price Variance $40

Credit Material Usage Variance $225

Credit Labor Rate Variance $110

Credit Labor Efficiency Variance $335

Explanation:

Preparation of the journal entry to be passed by Theta Company at the end of the month of February to close the variances

Debit Cost of Goods Sold $710

($40+$225+$110+$335)

Credit Material Price Variance $40

Credit Material Usage Variance $225

Credit Labor Rate Variance $110

Credit Labor Efficiency Variance $335

(To close the variances)

User Kiyo
by
3.0k points