P & L a/c re variances

[Sam]

Could anyone tell me how to record the labour rate and efficiency variance balances in the P & L account please? Also what would the debit and credits be for journal purposes for cost of sales, labour efficiency variance, labour rate variance and wages control account. Any advice much appreciated!

[RichB]

Points to note are as its a Standard costing system finished goods are held at standard cost and the wages cost is held at actual cost. The 2 variances LRV and LEV make up the difference (ADV Dr and FAV Cr) .<BR><BR>Eg Assuming standard finished goods of 750, Labour rate Var of 70 Adv, Labour efficiency Var of 50 Fav and an actual labour cost of 770 the journal would be as follows<BR><BR>DR BS Finished Goods 750<BR>DR PL Labour rate variance 70 (Adverse)<BR>CR PL Labour efficiency variance 50 (Favourable)<BR>CR BS Wages Control Account 770 <BR><BR>Hope this helps.

[Sam]

Thanks for that! Am going thru past papers and had got stuck with that - I can plod on now - cheers.