Problem 11-18 (Part Level Submission) Bechtel Technical Clothing produces parkas
ID: 2473002 • 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 $55 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 6,900 parkas with fixed overhead of $58,000 and variable overhead of $6.1 per parka.
During 2015, 8,500 parkas were manufactured. The company purchased 23,300 yards of material at a cost of $1,351,400. Production required 22,100 yards of material. The cost of direct labor was $1,020,000 for 27,600 hours. Actual overhead for the year was $94,500. 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)
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 $55 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 6,900 parkas with fixed overhead of $58,000 and variable overhead of $6.1 per parka.
During 2015, 8,500 parkas were manufactured. The company purchased 23,300 yards of material at a cost of $1,351,400. Production required 22,100 yards of material. The cost of direct labor was $1,020,000 for 27,600 hours. Actual overhead for the year was $94,500. All purchases are on account.
Explanation / Answer
Step 1: Calculation Of Direct material price variance:
Formula:
Direct Material Price Variance = (Actual Price - Standard Price) * Actual Quantity
Actual Price = Actual cost / Actual Units = $1,351,400 / 23,300 = $58
Direct Material Price Variance = ($58 - $55) * 23,300
Direct Material Price Variance = 69,900 Favorable
Step 2: Journal Entry:
a) Journal Entries to purchase of Materials:
Account Head
Debit
Credit
Direct Material Inventory (23,300 * $55)
1,281,500
Direct Material Price Variance
69,900
Accounts Payable (23,300 * $58)
1,351,400
a) Journal Entries to purchase of Materials:
Account Head
Debit
Credit
Direct Material Inventory (23,300 * $55)
1,281,500
Direct Material Price Variance
69,900
Accounts Payable (23,300 * $58)
1,351,400