Assessment 4 Part 1: Standard Cost Summary and Related Journal Entries The norma
ID: 2536630 • Letter: A
Question
Assessment 4 Part 1: Standard Cost Summary and Related Journal Entries The normal capacity of Central Manufacturing Company is 45,000 direct labor hours and 20,000 units per month. A finished unit requires 6 pounds of materials at an estimated cost of $2 per pound. The estimated cost of labor is $10 per hour. The plant estimates that overhead for a month will be $40,000. During the month of March, the plant totaled 41,800 direct labor hours at an average rate of $9.50 an hour. The plant produced 18,000 units, using 105,000 pounds of materials at a cost of $2.04 per pound. Using this spreadsheet, prepare (a) a standard cost summary showing standard unit cost, and (b) journal entries to charge materials and labor to work-in-process. Standard Cost Summary Materials (6 lbs. @ $2.00 per lb.): Labor: Factory overhead: Standard cost per unit: Work in Process : Materials Materials Price Variance (U) Materials Quantity Variance (F) Materials Work in Process : Labor Labor Efficiency Variance (F) Labor Rate Variance (F) Payroll Assessment 4 Part 1: Standard Cost Summary and Related Journal Entries The normal capacity of Central Manufacturing Company is 45,000 direct labor hours and 20,000 units per month. A finished unit requires 6 pounds of materials at an estimated cost of $2 per pound. The estimated cost of labor is $10 per hour. The plant estimates that overhead for a month will be $40,000. During the month of March, the plant totaled 41,800 direct labor hours at an average rate of $9.50 an hour. The plant produced 18,000 units, using 105,000 pounds of materials at a cost of $2.04 per pound. Using this spreadsheet, prepare (a) a standard cost summary showing standard unit cost, and (b) journal entries to charge materials and labor to work-in-process. Standard Cost Summary Materials (6 lbs. @ $2.00 per lb.): Labor: Factory overhead: Standard cost per unit: Work in Process : Materials Materials Price Variance (U) Materials Quantity Variance (F) Materials Work in Process : Labor Labor Efficiency Variance (F) Labor Rate Variance (F) Payroll Assessment 4 Part 1: Standard Cost Summary and Related Journal Entries The normal capacity of Central Manufacturing Company is 45,000 direct labor hours and 20,000 units per month. A finished unit requires 6 pounds of materials at an estimated cost of $2 per pound. The estimated cost of labor is $10 per hour. The plant estimates that overhead for a month will be $40,000. During the month of March, the plant totaled 41,800 direct labor hours at an average rate of $9.50 an hour. The plant produced 18,000 units, using 105,000 pounds of materials at a cost of $2.04 per pound. Using this spreadsheet, prepare (a) a standard cost summary showing standard unit cost, and (b) journal entries to charge materials and labor to work-in-process. Standard Cost Summary Materials (6 lbs. @ $2.00 per lb.): Labor: Factory overhead: Standard cost per unit: Work in Process : Materials Materials Price Variance (U) Materials Quantity Variance (F) Materials Work in Process : Labor Labor Efficiency Variance (F) Labor Rate Variance (F) PayrollExplanation / Answer
Standard Cost Summary Materials (6 lbs. @ $2.00 per lb.): $12 Labor: (2.25 hours @$10 per hour 22.5 Factory overhead (2.25 hours $.9) 2.025 Standard cost per unit: $36.53 Work in Process : Materials Materials Price Variance (U) 4200 U (AQ*AR)-(AQ*Sr) (105000*2.04)-(105000*2) Materials Quantity Variance (F) 6000 F SR*(AQ-SQ allowed) -6000 2*(105000-(18000*6)) Material (105000*2.04) 214200 Work in Process : Labor Labor Efficiency Variance (F) SR*(AH-SH allowed) 10*(41800-(18000*2.25)) 13000 U Payroll (41800*9.5) 37620 Labor rate variance (AH*AR)-(AH*Sr) 20900 F (41800*9.5)-(41800*10) -20900 No. of hours labor 45000/20000 2.250 Ans 2 Journatl entry Dr Cr Raw material Inventory (105000*2) 210000 Material Price Variance 4200 Accounts Payable (105000*2.04) 214200 Work in process Inventory (18000*6*2) 216000 Materials Quantity Variance 6000 Raw material Inventory 210000 Work in process Inventory (18000*2.25*10) 405000 Labor Efficiency Variance 13000 Labor rate Variance 20900 Wages payable (41800*9.5) 397100 Work in process 37620 Factory overhead 37620 (41800*.9)