Problem 11-18 (Part Level Submission) Bechtel Technical Clothing produces parkas
ID: 2452063 • Letter: P
Question
Problem 11-18 (Part Level Submission)
Bechtel Technical Clothing produces parkas used by arctic explorers, mountain climbers, and people living in Minnesota. The company uses a standard costing system, and standards call for 2.5 yards of material at $54 per yard for each parka. The standard cost for labor is 3.5 hours at $35 per hour. Standard overhead is $14 per unit. For the year 2015, expected production is 8,200 parkas with fixed overhead of $60,000 and variable overhead of $6.1 per parka.
During 2015, 8,500 parkas were manufactured. The company purchased 24,900 yards of material at a cost of $1,444,200. Production required 22,200 yards of material. The cost of direct labor was $1,040,000 for 27,900 hours. Actual overhead for the year was $92,700. All purchases are on account.
(a)
Prepare a journal entry to record the purchase of material. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
(To record the purchase of raw material)
b. Prepare a journal entry to record material used in production
c. Prepare a journal entry to record direct labor.
d. Prepare a journal entry to record actual overhead and overhead applied.
e. Prepare a journal entry to close the variances in requirements a through d to Cost of Goods Sold.
Problem 11-18 (Part Level Submission)
Bechtel Technical Clothing produces parkas used by arctic explorers, mountain climbers, and people living in Minnesota. The company uses a standard costing system, and standards call for 2.5 yards of material at $54 per yard for each parka. The standard cost for labor is 3.5 hours at $35 per hour. Standard overhead is $14 per unit. For the year 2015, expected production is 8,200 parkas with fixed overhead of $60,000 and variable overhead of $6.1 per parka.
During 2015, 8,500 parkas were manufactured. The company purchased 24,900 yards of material at a cost of $1,444,200. Production required 22,200 yards of material. The cost of direct labor was $1,040,000 for 27,900 hours. Actual overhead for the year was $92,700. All purchases are on account.
(a)
Prepare a journal entry to record the purchase of material. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
(To record the purchase of raw material)
b. Prepare a journal entry to record material used in production
c. Prepare a journal entry to record direct labor.
d. Prepare a journal entry to record actual overhead and overhead applied.
e. Prepare a journal entry to close the variances in requirements a through d to Cost of Goods Sold.
Explanation / Answer
Journal Entries:
S.No. Particulars Debit Credit a. Raw Material Inventory 1444200 Accounts Payable 1444200 b. Work in progess(1444200/24900*22200) 1287600 Raw Material Inventory 1287600 c. Overhead Cost Pool 1040000 Wage Expense 1040000 d. Cost of Goods Sold 92700 Overhead Cost Pool 92700 e. Overhead efficiency Variance[(8200-8500)*6.1] 1830 Overhead expenditure variance[(6.1-10.905)*8500] 40850 Labor Rate Variance[(35-37.276)*27900] 63500 Material Usage Variance [(21250-22200)*54] 51300 Material Price Variance[(54-58)*24900] 99600 Labor usage variance [(29750-27900)*35] 64750 Cost of Goods Sold 192330