TTIVE SUMMARY PROBLEM ONE The Beal Manufacturing Company uses a standand abeorpt
ID: 2583400 • Letter: T
Question
TTIVE SUMMARY PROBLEM ONE The Beal Manufacturing Company uses a standand abeorption costing job costing syat hur Manufacturing overhead is allocated to products on the basis of standard direct laa beginning of 20xx, Beal adopted At the the following standards for its manufacturing costs Direct materials Direct labor Overhead: 3 lb.$5 per Ib. 5 hr @ $15 per hour Variable Fixed $6 per direct labor hour $8 per direct labor hour The denominator level for total manufacturing overhead per month in 20xx is 40,000 direct labor Beal's expected level of sales is 6,000 units at $190 each. Beal's flexible budget for March 20xx was based on this denominator level 1. The records for January indicated the following: 2. Direct materials purchased 25,000 lb at $5.20 per pound 3. Direct materials used 23,100 lb 4. Direct labor 40,100 hours@$14.60 per hour 5. Total overhead $600,000 (1/2 is variable; the remainder is fixed) 6. Actual production 7,800 units 7. Units sold 5,000 units at $200 per unit REQUIRED 1. Journalize the above transactions for March. 2. For January, determine all eight production variances. Also, determine the 3-way overhead variances and the 2-way overhead variances. 3. As consultant for Beal Manufacturing, what issues would you address and what would you recommend? Prepare pro forma income statements (three, including an actual income statement (assuming contribution margin format), flexible budget income statement, and a static budget income statement Calculate the sales price and sales volume variances. 4. 5.Explanation / Answer
Answer: 1.
Journal Entries
Purchases A/c Dr. 130000
To Cash A/c 130000
(Being Material purchased)
WIP A/c Dr. 120120
To Purchases A/c 120120
(Being Material issue for production Department)
Wages A/c Dr 585460
To Cash A/c 585460
(Being Wages Paid)
WIP A/c Dr. 585460
To Wages A/c 585460
(Being Labour used in Production)
Over Head A/c Dr, 600000
To Cash 600000
(Being overhead Paid)
WIP A/c Dr. 600000
To overhead A/c 600000
(Being ovehead used in poduction)
Answer: 2.
Answer 3.
a. Purchase manager should buy mterial at a lowre rate as much as possible
b. Production manager should control over issue of material and labour should work efficiently
Answer 4.
Answer 5.
Note:
(A) = Adverse
(F) = Favourable
Actual Production 7800 Units Calculation of Standard Data base on above actual Production Particular Unit consumption Total Requirement Rate Total Amount Material 3 23400 5 117000 Labour 5 39000 15 585000 Varable Over Head 5 39000 6 234000 Fixed Overhed 5 39000 8 312000Related Questions
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