Rip Tide Company manufactures surfboards. Its standard cost information follows:

Question

Rip Tide Company manufactures surfboards. Its standard cost information follows:

Standard Quantity Standard Price (Rate) Standard Unit Cost
Direct materials (fiberglass) 14.2 sq. ft. $ 4.6 per sq. ft. $ 65.32
Direct labor 10.4 hrs. $ 14 per hr. 145.60
Variable manufacturing overhead (based on direct labor hours) 10.4 hrs. $ 8 per hr. 83.20
Fixed manufacturing overhead ($32,000 ÷ 310 units) 103.23

Rip Tide has the following actual results for the month of June:

Number of units produced and sold 170
Number of square feet of fiberglass used 4,300
Cost of fiberglass used $ 22,360
Number of labor hours worked 1,708
Direct labor cost $ 25,108
Variable overhead cost $ 12,981
Fixed overhead cost $ 29,500

Required:
1 & 2. Prepare the journal entries to record the direct materials, direct labor costs and related variances for Rip Tide. Assume the company purchases raw materials as needed and does not maintain any ending inventories. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations and round your final answers to nearest dollar amount.)

General Journal Options:

No Journal Entry Required

Cash or Accounts Payable

Cost of Goods Sold

Direct Labor Efficiency Variance

Direct Labor Rate Variance

Direct Materials Price Variance

Direct Materials Quantity Variance

Fixed Overhead Spending Variance

Fixed Overhead Volume Variance

Raw Materials Inventory

Variable Overhead Efficiency Variance

Variable Overhead Rate Variance

Rip Tide Company manufactures surfboards. Its standard cost information follows Standard Direct materials (fiberglass) Direct labor Variable manufacturing overhead (based on Quantity 14.2 sq. f. 10.4 hrs Standard Price (Rate) $4.6 per sq. ft. $ 14 per hr $ 8 per hr Unit Cost $ 65.32 145.60 10.4 hrs 83.20 direct labor hours) Fixed manufacturing overhead ($32,000 103.23 310 units) Rip Tide has the following actual results for the month of June Number of units produced and sold Number of square feet of fiberglass used Cost of fiberglass used Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 170 4,300 $22,360 1,708 $25,108 $12,981 $29,500

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit Work in process (170*65.32) 11104.40 Material price variance (4.6*4300-22360) 2580 Material quantity variance (170*14.2-4300)*4.6 8675.60       Account payable 22360 (To record material cost and variance) Work in process (170*145.60) 24752 Labour price variance (14*1708-25108) 1196      Labour efficiency variance (170*10.4-1708)*14 840      Wages payable 25108 (To record labour cost and variance)

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