Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Chapter 9.B, Problem 5P
Transaction Analysis; Income Statement Preparation
Wallis Company" manufactures only one product and uses a
The company's standard cost card for its only product is as follows:
During the year Wallis completed the following transactions:
a. Purchased (with cash) 230.000 pounds of raw material at a price of $29.50 per pound.
b. Added 215.000 pounds of raw material to work in process to produce 95.000 units.
c. Assigned direct labor costs to work in process, The direct laborers (who were paid in cash) worked 245.000 hours at an average cost of S16.00 per hour to manufacture 95.000 units.
d. Applied fixed overhead to work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed to manufacture 95.000 units. Actual fixed overhead costs for the year were $2,740,000. Of this total, $1,340,000 related to items such as insurance, utilities, and pase 463 salaried indirect laborers that were all paid in cash and $1,400,000 related to
e. Transferred 95.000 units from work in process to finished goods.
f. Sold (for cash) 92,000 units to customers at a price of $170 per unit,
g. Transferred the standard cost associated with the 92,000 units sold from finished goods to cost of goods sold.
h. Paid $2,120,000 of selling and administrative expenses. i. Closed all standard cost variances to cost of goods sold.
Required:
1. Compute all direct materials, direct labor, and fixed overhead variances for the year.
2. Using Exhibit 9B-3 as a guide, record transactions a through i for Wallis Company.
3. Compute the ending balances for Wallis Company's balance sheet, Using Exhibit 9B−5 as a guide, prepare Wallis Company's income statement for the year.
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Puvo, Incorporated, manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours. The company uses a standard cost system and has established the following standards for one unit of product:
Standard Quantity
Standard Price or Rate
Standard Cost
Direct materials
7.0
pounds
$ .80
per pound
$ 5.60
Direct labor
0.7
hours
$ 45.50
per hour
$ 31.85
Variable manufacturing overhead
0.7
hours
$ 9.70
per hour
$ 6.79
During March, the following activity was recorded by the company:
The company produced 3,600 units during the month.
A total of 20,600 pounds of material were purchased at a cost of $14,780.
There was no beginning inventory of materials on hand to start the month; at the end of the month, 4,820 pounds of material remained in the warehouse.
During March, 1,210 direct labor-hours were worked at a rate of $42.50 per hour.
Variable manufacturing overhead costs during…
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Chapter 9 Solutions
Introduction To Managerial Accounting
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