Fundamentals Of Cost Accounting (6th Edition)
Fundamentals Of Cost Accounting (6th Edition)
6th Edition
ISBN: 9781259969478
Author: WILLIAM LANEN, Shannon Anderson, Michael Maher
Publisher: McGraw Hill Education
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Chapter 16, Problem 70P
To determine

Prepare journal entries to record the activity for the last month using standard costing.

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Explanation of Solution

Prepare journal entries to record the activity for the last month using standard costing:

For direct material:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
 

Work-in-Process Inventory

($2×40 yards×5,000 units)

 400,000 
 Materials Price Variance 11,400 
 Materials Efficiency Variance 56,000
 Accounts Payable  467,400
 (To record the cost related to direct material)   

Table (1)

For direct labor:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
 

Work-in-Process Inventory

($20×5 hours×5,000 units)

 500,000 
 Direct Labor Price Variance 10,080 
 Direct Labor Efficiency Variance 4,000
 Wages Payable  514,080
 (To record the cost related to direct labor)   

Table (2)

For overhead:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
 Work-in-Process Inventory (Variable overhead) ($12×5 hours×5,000 units) 300,000 
 Work-in-Process Inventory (Fixed overhead) ($4×5 hours×5,000 units) 100,000 
 Variable Overhead Applied  300,000
 Fixed Overhead Applied  100,000
 (To record the fixed and variable overhead applied)   
     
 Overhead (Actual) 444,000 
 Miscellaneous Payables and Inventory Accounts  444,000
 (To record the actual overhead)   
     
 Variable Overhead (Applied) 300,000 
 Fixed Overhead (Applied) 100,000 
 

Overhead Price Variance

($444,000$302,400$115,200)

 26,400 
 Variable Overhead Efficiency Variance 2,400 
 Fixed Overhead Production Volume Variance 15,200 
 Overhead (Actual)  444,000
 (To record the fixed and variable applied overhead and variances)   
    

Table (3)

For finished goods:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
 Finished Goods Inventory 1,300,000 
 Work-in-Process Inventory  1,300,000
 (To record the finished goods inventory)  

Table (4)

For the sales made:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
 Accounts Receivable 2,375,000 
 Sales Revenue  2,375,000
 (To record the sales made)   
 Cost of Goods Sold 1,300,000 
 Finished Goods Inventory  1,300,000
 (To record the cost of goods sold)  

Table (5)

Record the disposition of variances:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
 Cost of Goods Sold 125,480 
 Materials Price Variance  11,400
 Materials Efficiency Variance  56,000
 Direct Labor Price Variance  10,080
 Direct Labor Efficiency Variance  4,000
 Variable Overhead Efficiency Variance  2,400
 Fixed Overhead Production Volume Variance  15,200
 Overhead Price Variances  26,400
 (To close the variance accounts to Cost of Goods Sold)   
    

Table (6)

The variance analysis except for variable overhead variance and fixed overhead price variance:

Direct Material VariancesAmount
Price Variance AQ (APSP)$     11,400
Efficiency Variance SP (AQ  SQ) $     56,000
Total Variance $   67,400U
Direct Labor Variances 
Price Variance AQ (APSP) $     10,080
Efficiency Variance SP (AQ  SQ) $       4,000
Total Variance $   14,080U
Variable Overhead Variance:
Efficiency Variance SP (AQ  SQ)$     2,400U
Total Variance$     2,400U
Fixed Overhead Variance 
Production Volume Variance (Applied -Fixed) $    15,200
 Total Variance $   15,200U

Table (7)

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Chapter 16 Solutions

Fundamentals Of Cost Accounting (6th Edition)

Ch. 16 - What is the link between flexible budgeting and...Ch. 16 - Actual revenues are greater than budgeted for...Ch. 16 - Pick an organization you know, such as a school,...Ch. 16 - Give two reasons why dividing production cost...Ch. 16 - Prob. 15CADQCh. 16 - My firm has a wage contract with the union....Ch. 16 - Prob. 17CADQCh. 16 - The production volume variance should be charged...Ch. 16 - Prob. 19CADQCh. 16 - Prob. 20CADQCh. 16 - Flexible Budgeting The master budget at Western...Ch. 16 - Sales Activity Variance Refer to the data in...Ch. 16 - Profit Variance Analysis Refer to the data in...Ch. 16 - Flexible Budget Given the data shown in the...Ch. 16 - Fill in Amounts on Flexible Budget Graph Fill in...Ch. 16 - Flexible Budget Label (a) and (b) in the graph and...Ch. 16 - Prepare Flexible Budget Osage, Inc., manufactures...Ch. 16 - Sales Activity Variance Refer to the data in...Ch. 16 - Profit Variance Analysis Use the information from...Ch. 16 - Sales Activity Variance The following data are...Ch. 16 - Sales Activity Variance Selected data for October...Ch. 16 - Prob. 32ECh. 16 - Prob. 33ECh. 16 - Prob. 34ECh. 16 - Prob. 35ECh. 16 - Prob. 36ECh. 16 - Prob. 37ECh. 16 - Variable Cost Variances The following data reflect...Ch. 16 - Variable Cost Variances The records of Norton,...Ch. 16 - (Appendix used in requirement [b]) Variable Cost...Ch. 16 - (Appendix used in requirement [b]) Variable Cost...Ch. 16 - Fixed Cost Variances Information on Carney...Ch. 16 - Prob. 43ECh. 16 - Prob. 44ECh. 16 - Fixed Cost Variances Mint Company applies fixed...Ch. 16 - Prob. 46ECh. 16 - Prob. 47ECh. 16 - (Appendix used in requirement [c]) Comprehensive...Ch. 16 - Comprehensive Cost Variance Analysis NSF Lube is a...Ch. 16 - Overhead Variances Brice Corporation shows the...Ch. 16 - Solve for Master Budget Given Actual Results A new...Ch. 16 - Find Missing Data for Profit Variance Analysis...Ch. 16 - Find Data for Profit Variance Analysis Required...Ch. 16 - Prob. 54PCh. 16 - Prepare Flexible Budget Odessa, Inc., reports the...Ch. 16 - Prob. 56PCh. 16 - Prob. 57PCh. 16 - Prob. 58PCh. 16 - Prob. 59PCh. 16 - Prob. 60PCh. 16 - Direct Materials Information about direct...Ch. 16 - Prob. 62PCh. 16 - Prob. 63PCh. 16 - Prob. 64PCh. 16 - Overhead Cost and Variance Relationships...Ch. 16 - Prob. 66PCh. 16 - Prob. 67PCh. 16 - Ethics and Standard Costs Farmer Franks produces...Ch. 16 - Comprehensive Variance Problem The standard cost...Ch. 16 - Prob. 70PCh. 16 - Find Actual and Budget Amounts from Variances JW...Ch. 16 - Variance Computations with Missing Data The...Ch. 16 - Comprehensive Variance Problem Sweetwater Company...Ch. 16 - Prob. 74PCh. 16 - Prob. 75PCh. 16 - Keewee Company manufactures a single product for...
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