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Decena Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs. Information concerning the direct labor standards for the companys only product is as follows:

Inputs	Standard Quantity or Hours		Standard Price or Rate			Standard Cost
Direct labor	0.90	hours	$	18.00	per hour		16.20

During the year, the company assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 15,830 hours at an average cost of $18.50 per hour. The company calculated the following direct labor variances for the year:

Labor rate variance	$	7,915	U
Labor efficiency variance	$	1,800	F

Assume that all transactions are recorded on the below worksheet, which is similar to the worksheet shown in your text except that it has been divided into two parts so that it fits on one page. The beginning balances in each of the accounts have been given. PP&E (net) stands for Property, Plant, and Equipment net of depreciation.

	Cash	Raw Materials	Work in Process	Finished Goods	PP&E (net)	=	Materials Price Variance	Materials Quantity Variance	Labor Rate Variance	Labor Efficiency Variance	FOH Budget Variance	FOH Volume Variance	Retained Earnings
1/1	$1,070,000	$54,910	$0	$84,945	$425,600	=	$0	$0	$0	$0	$0	$0	$1,635,455

When the direct labor cost is recorded, which of the following entries will be made?

Multiple Choice

a. $1,800 in the Labor Efficiency Variance column

b. ($1,800) in the Labor Rate Variance column

c. $1,800 in the Labor Rate Variance column

d. ($1,800) in the Labor Efficiency Variance column

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