Problem 11-6A (Part Level Submission) Jorgensen Corporation uses standard costs
ID: 2509605 • Letter: P
Question
Problem 11-6A (Part Level Submission) Jorgensen Corporation uses standard costs with its job order cost accounting system. In January, an order (Job No. 12) for 1,000 units of Product B was received. The standard cost of one unit of Product B is as follows. 3 pounds at $1.30 per pound 1.80 hour at $10.00 per hour 2 hours (variable $4.40 per machine hour; fixed $3.40 per machine $3.90 18.00 15.60 $37.50 Direct materials Direct labor Overhead Standard cost per unit Normal capacity for the month was 4,020 machine hours. During January, the following transactions applicable to Job No. 12 occurred. hour) 1. Purchased 3,400 pounds of raw materials on account at $1.38 per pound. 2. Requisitioned 3,400 pounds of raw materials for Job No. 12. 3. Incurred 1,860 hours of direct labor at a rate of $9.95 per hour. 4. Worked 1,860 hours of direct labor on Job No. 12 5. Incurred manufacturing overhead on account $16,850 6. Applied overhead to Job No. 12 on basis of standard machine hours allowed. 7. Completed Job No. 12 8. Billed customer for Job No. 12 at a selling price of $85,000Explanation / Answer
No Accounts Title Dr Cr 1 Raw material Inventory (3400*1.3) 4420 Material Price variance (3400*(1.38-1.3)) 272 Accounts payable (3400*1.38) 4692 (being raw material purchased on account) 2 Work In process (1000*3*1.3) 3900 Material quantity variance 520 Raw material Inventory 4420 (being raw material requisition to job) 3 Factory Labor 18507 Wages payable(1860*9.95) 18507 (being factory labor cost incurred) 4 Work In process (1000*1.8*10) 18000 Labor efficiency variance 600 Labor rate variance (1860*(10-9.95)) 93 Factory Labor 18507 (being cost assigned to job) 5 Manufacturing overhead 16850 Accounts payable 16850 (being manufacturinhg overhead incurred) 6 Work In process (2*7.8*1000) 15600 Ovehead efficiency variance (bal fig) 1250 Overhead rate variance (16850-(1860*7.8)) 2342 Manufacturing overhead 14508 (7.8*1860) 7 Finished Goods Inventory 37500 Work In process 37500 (3900+18000+(1000*2 hours*7.8) 8 Accounts Receivable sales 85000 (being sales made on account) 85000 Cost of good sold 37500 Finished Goods Inventory 37500 (being cost of sales recorded)