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Entries for Standard Costing System

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									                                                                   Entries for Standard Costing System
Materials Inventory                                                                                     AQ x SP
Materials Price Variance
                                            Accounts Payable                                                                                     AQ x AP
                                            Materials Price Variance

Work in Process                                                                                         SQ x SP
Materials Usage Variance
                                            Materials Inventory                                                                                  AQ x SP
                                            Materials Usage Variance

Factory Payroll                                                                                         AQ x AR
                                            Wages, Salaries, and Employment Taxes Payable                                                        AQ x AR

Work in Process                                                                                         SQ x SR
Labor Rate Variance
Labor Efficiency Variance
                                            Factory Payroll                                                                                      AQ x AR
                                            Labor Rate Variance
                                            Labor Efficiency Variance

Variable Overhead Incurred                                                                              Actual Costs
                                            Cash, Materials Inventory, Factory Payroll, etc                                                      Actual Costs

Work in Process                                                                                         SQ of Input for Actual Output x VOR
                                            Variable Overhead Allocated                                                                          SQ of Input for Actual Output x VOR

Variable Overhead Allocated
Variable Overhead Spending Variance
Variable Overhead Efficiency Variance
                                            Variable Overhead Incurred
                                            Variable Overhead Spending Variance
                                            Variable Overhead Efficiency Variance

Fixed Overhead Incurred                                                                                 Actual Costs
                                            Cash, Factory Payroll, Accumulated Depreciation, etc                                                 Actual Costs

Work in Process                                                                                         SQ of Input for Actual Output x FOR
                                            Fixed Overhead Allocated                                                                             SQ of Input for Actual Output x FOR

Fixed Overhead Allocated
Fixed Overhead Spending Variance
Fixed Overhead Volume Variance
                                            Fixed Overhead Incurred
                                            Fixed Overhead Spending Variance
                                            Fixed Overhead Volume Variance

Finished Goods Inventory                                                                                At Standard Costs
                                            Work in Process                                                                                      At Standard Costs

Accounts Receivable or Cash
Cost of Goods Sold
                                            Sales
                                            Finished Goods Inventory

All variances created above would be closed at the end of the period to Cost of Goods Sold or prorated among Cost of Goods Sold, Finished Goods, and Work in Process.
This will bring Work in Process, Finished Goods, and Cost of Goods Sold to actual costs as required by GAAP.

								
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