9-1 THROUGH 9-5 USE THE FOLLOWING DATA: The standard operating cacity of Corona

Question

9-1 THROUGH 9-5 USE THE FOLLOWING DATA:

The standard operating cacity of Corona Manufacturing Co. is 1000 units. A detailed study of the manufacturing data relating to the standard production cost of one product reaveled the following:

1. 2 lbs of materials are needed to produce 1 unit

2. Standard unit cost of materials is $8 per lb

3.It takes 1 hr of labor to produce 1 unit

4. Standard labor rate is $10 per hr

5. Standard overhead for this volume is $4000

EACH CASE IN 9-1 THROUGH 9-5 REQUIRES THE FOLLOWING:

a) Set up standard cost summary showing the standard unit cost.

b) Analyze the variances for materials and labor

c) Make journal entries to record the transfer to WIP of:

1. Material costs

2. Labor costs

3. Overhead costs   

*When making these entries, include variances.)

d) Prepare the journal entry to record the transfer of costs to the finished goods account.

Problem 9-1

STANDARD UNIT COST; VARIANCE ANALYSIS; JOURNAL ENTRIES

1000 units were started and finished

Case1: All prices and quantities for the cost elements are standard, exept for materials cost, which is $8.50 per lb.

Case 2: All prices and quantities for the cost element are standard, exept that 1900 lb of materials were used.

Explanation / Answer

a Set up standard cost summary showing the standard unit cost. Material cost (1000units*2lbs*$8) $16,000 Labour cost (1000hr*10) $10,000 Overhead cost $4,000 Total Standard Cost $30,000 b Analyze the variances for materials and labor Material Cost Variance = Standard Cost-Actual cost 16000-(1900lbs*$8.5) -150 adverse Material Rate Variance (sp*aq)-(aq*ap) (8*1900)-(8.5*1900) -950 adverse Material Usage Variance (sq-aq)*sp [(1000*2)-1900]*8 800 Fevourable Not any difference in labour cost , there labour variance will not be calculate c journal entries to record the transfer to WIP of Amount Dr Amount Cr Material WIP control a/c              dr 16000                    to stores ledger control a/c 16000 Labour WIP control a/c              dr 10000            to Wage control a/c 10000 overhead WIP control a/c              dr 4000            to overhead control a/c 4000 d Journal entry to record the transfer of cost to the finished goods a/c finished goods control a/c   dr 30000                       to WIP control      a/c 30000

Related Questions

Navigate

• Browse (All)
• Browse 9
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.