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?

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

Step-by-step 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)