Problem 23-6A (Part Level Submission) Jorgensen Corporation uses standard costs

Question

Problem 23-6A (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. Direct materials 3 pounds at $1.00 per pound $3.00 Direct labor 1.50 hour at $10.00 per hour 15.00 Overhead 2 hours (variable $4.30 per machine hour; fixed $3.30 per machine 15.20 hour) Standard cost per unit $33.20 Normal capacity for the month was 4,030 machine hours. During January, the following transactions applicable to Job No. 12 occurred. 1. Purchased 3,100 pounds of raw materials on account at $1.06 per pound. 2. Requisitioned 3,100 pounds of raw materials for Job No. 12. 3. Incurred 1,580 hours of direct labor at a rate of $9.90 per hour. 4. Worked 1,580 hours of direct labor on Job No. 12. 5. Incurred manufacturing overhead on account $16,670. 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 $75,000.

Explanation / Answer

Journal entries:

$15,800

No. Account Titles Debit Credit 1. Raw materials inventory(3100×$1) $3,100 Material price variance(3100-(1.06-$1)) $186 Account payable(3100×$1.06) $3,286 2. Work in process inventory (3000×$1) $3,000 Material quantity variance{(3100-3000)×$1} $100 Raw material inventory(3100×$1) $3,100 3. Factory labour ($1580×$10)

$15,800

Labour price variance(1580×($10-$9.90)) $158 Factory wages payable(1580×$9.90) $15,642 4. Work in process inventory(1500×$10) $15,000 Labour quantity variance{(1580-1500)×$10} $800 Factory labour(1580×$10) $15,800 5. Manufacturing overhead $16,670 Account payable $16,670 6 Work in process inventory{ (1500×2 hours)×(4.30+3.30)} $22,800 Manufacturing overhead $22,800 7. Finished goods inventory $40,800 Work in process inventory ($22,800+15,000+3000) $40,800 8.a Account receivable $75,000 Sales $75,000

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