Problem 11-18 (Part Level Submission) Bechtel Technical Clothing produces parkas
ID: 2474508 • 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 material used in production
b. prepare a journal entry to record direct labor
c. prepare a journal entry to record actual overhead and overhead applied. record manufacutring overhead to miscellaneous accounts
d. prepare a journal entry to close the variances in requirements a through d to cost of goods sold.
Explanation / Answer
Preparing Journal entries:
Entry Debit Credit a Work in processMaterials 1,351,400
1.351.400 b Work in process
Wages payable 1,202,000
1,020,000 c miscellaneous accounts
Accounts Payable ( entry for incurred) $94,500
$94,500 Work In Process
miscellaneous accounts
( Applied Manufacturing Overhead on the basis of variable portion + fixed cost = $6.1 * 8,500 + 58,000 109,850
109,850
d miscellaneous accounts
Cost of Goods Sold (109,850-94,500) 15,350
15,350