Question

Grainger Company has established the following standard variable costs for a unit of finished product:             Direct...

Grainger Company has established the following standard variable costs for a unit of finished product:

            Direct materials: 2.0 lbs. @ $4.00 per lb.       $ 8.00

            Direct labor: 1.5 hrs. @ $14.00 per hr.           21.00

            Variable overhead: 1.5 hrs. @ $20 per hr.      30.00

The following occurred during the year:

            Actual production: 32,000 completed units.

            Direct materials purchased: 70,000 lbs. at $3.82 per lb.

            Direct materials requisitioned into production; 66,000 lbs.

            Actual direct labor cost incurred: 51,000 hrs. at $12.60 per hr.

The journal entry to record direct labor under a standard cost system includes:

a.

A debit to Labor Rate Variance of $71,400.

b.

A credit to Labor Rate Variance of $71,400.

c.

A debit to Work in Progress of $672,000.

d.

Both b and c.

The journal entry to record the use of materials in production under a standard cost system is:

a.

Work in Progress        280,000

            Materials Price Variance        12,600

            Accounts Payable                    267,400

b.

Work in Progress 256,000

Materials Quantity Variance    8,000

            Materials 264,000

c.

Work in Progress             256,000

            Materials                                 256,000

d.

Work in Progress        267,400

            Materials                                 267,400

The journal entry to record the purchase of materials under a standard cost system is:

a.

Materials                                 267,400

            Accounts Payable                         267,400

b.

Materials                                 280,000

            Materials Price Variance              12,600

            Accounts Payable                         267,400

c.

Materials                                 267,400

Materials Price Variance    12,600

            Accounts Payable                         280,000

d.

Materials                                 280,000

            Accounts Payable                         280,000

The purchase of poor quality materials may cause a favorable materials price variance and an unfavorable labor

efficiency variance due to the extra effort required to work with inferior materials in the production process.

True

False

Within the relevant range, fixed cost per unit remains constant as the production level changes; the amount of variable

cost per unit changes with the production level.

True

False

Although budgeting is often perceived as a mechanical number-crunching task for accountants, it is an important

management tool that most (if not all) successful businesses utilize to a great extent to facilitate planning and control

functions.

True

False

Homework Answers

Answer #1

Question 1. Solution:

Journal entry would we :

Work in process Dr.    (32,000*1.5*$14.00) $672,000
Labor rate variance Cr. [51,000*($14-12.60) ] $71,400
Wages payable Cr. $600,600

Thus, answer is Option d. Both b. and c.

Question: 2 solution:

The entry would be:

Work in process (32,000*2*$4.00) $256,000
Materials $256,000

Thus, option c. is the correct answer.

Rest cost of materials in Work-in process would be adjusted through variances.

Question : 3

Solution: Journal entry to purchase materials would be as follows:

Materials (70,000*$3.82) $267,400
Accounts Payable $267,400

Thus, option a. is the correct answer.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Reed Corp. has set the following standard direct materials and direct labor costs per unit for...
Reed Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. Direct materials (15 lbs. @ $4 per lb.) $60 Direct labor (4 hrs. @ $15.00 per hr.) 60 During June the company incurred the following actual costs to produce 9,000 units. Direct materials (137,400 lbs. @ $3.80 per lb.) $ 522,120 Direct labor (40,200 hrs. @ $15.15 per hr.). 609,030 AQ = Actual Quantity SQ = Standard Quantity AP =...
Reed Corp. has set the following standard direct materials and direct labor costs per unit for...
Reed Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. Direct materials (15 lbs. @ $4 per lb.) $60 Direct labor (3 hrs. @ $16 per hr.) 48 During June the company incurred the following actual costs to produce 8,300 units. Direct materials (127,400 lbs. @ $3.80 per lb.) $ 484,120 Direct labor (29,000 hrs. @ $16.15 per hr.). 468,350 AH = Actual Hours SH = Standard Hours AR =...
23-11 Hutto Corp. has set the following standard direct materials and direct labor costs per unit...
23-11 Hutto Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. # Lbs/Hrs per unit Cost per lb/Hr Standard Cost Materials 15 $4.00 $60 Direct Labor 3 $15.00 $45 During May the company incurred the following actual costs to produce 9,000 units. Total Lbs/Hrs Cost per lb/Hr Standard Cost Materials 138,000 $3.75 $517,500 Direct Labor 31,000 $15.10 $468,100 Compute the (1) direct materials price and quantity variances and (2) direct...
23-11 Hutto Corp. has set the following standard direct materials and direct labor costs per unit...
23-11 Hutto Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. # Lbs/Hrs per unit Cost per lb/Hr Standard Cost Materials 15 $4.00 $60 Direct Labor 3 $15.00 $45 During May the company incurred the following actual costs to produce 9,000 units. Total Lbs/Hrs Cost per lb/Hr Standard Cost Materials 138,000 $3.75 $517,500 Direct Labor 31,000 $15.10 $468,100 Compute the (1) direct materials price and quantity variances and (2) direct...
Reed Corp. has set the following standard direct materials and direct labor costs per unit for...
Reed Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. Direct materials (15 lbs. @ $3 per lb.) $45 Direct labor (3 hrs. @ $14 per hr.) 42 During June the company incurred the following actual costs to produce 8,900 units. Direct materials (136,300 lbs. @ $2.70 per lb.) $ 368,010 Direct labor (30,600 hrs. @ $14.15 per hr.). 432,990 AH = Actual Hours SH = Standard Hours AR =...
A manufactured product has the following information for June.
A manufactured product has the following information for June.StandardActualDirect materials5 lbs. @ $8 per lb.38,000lbs. @ $8.10 per lb.Direct labor3 hrs. @ $16 per hr.22,200hrs. @ $16.40 per hr.Overhead3 hrs. @ $11 per hr.$252,700Units manufactured7,500(1) Compute the standard cost per unit.(2) Compute the total cost variance for June.Direct materials :Direct labor:Overhead:Total :Total cost variance:
A manufactured product has the following information for June.
A manufactured product has the following information for June.StandardActualDirect materials5 lbs. @ $8 per lb.38,000lbs. @ $8.10 per lb.Direct labor3 hrs. @ $16 per hr.22,200hrs. @ $16.40 per hr.Overhead3 hrs. @ $11 per hr.$252,700Units manufactured7,500(1) Compute the standard cost per unit.(2) Compute the total cost variance for June.Direct materials :Direct labor:Overhead:Total :Total cost variance:
Reed Corp. has set the following standard direct materials and direct labor costs per unit for...
Reed Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. Direct materials (14 lbs. @ $3 per lb.) $42 Direct labor (3 hrs. @ $16 per hr.) 48 During June the company incurred the following actual costs to produce 8,200 units. Direct materials (117,600 lbs. @ $2.80 per lb.) $ 329,280 Direct labor (29,100 hrs. @ $16.20 per hr.). 471,420 AH = Actual Hours SH = Standard Hours AR =...
Trico Company set the following standard unit costs for its single product. Direct materials (30 Ibs....
Trico Company set the following standard unit costs for its single product. Direct materials (30 Ibs. @ $4.80 per Ib.) $ 144.00 Direct labor (7 hrs. @ $14 per hr.) 98.00 Factory overhead—variable (7 hrs. @ $6 per hr.) 42.00 Factory overhead—fixed (7 hrs. @ $9 per hr.) 63.00 Total standard cost $ 347.00 The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 67,000 units per quarter. The following flexible budget...
Direct Materials and Direct Labor Variance Analysis Abbeville Fixture Company manufactures faucets in a small manufacturing...
Direct Materials and Direct Labor Variance Analysis Abbeville Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 90 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows: Standard wage per hr. $15.00 Standard labor time per faucet 40 min. Standard number of lbs. of brass 3 lbs. Standard price per lb. of brass $2.40 Actual price per lb. of brass $2.50 Actual...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT
Active Questions
  • Answer to the questions based on your knowledge about positive psychology and happiness theory (PERMA-model; P+E+M)...
    asked 7 minutes ago
  • Are the solutions eBay is seeking to implement good solutions? Why or why not? Are there...
    asked 11 minutes ago
  • Algorithm’s complexity is measured on input size instead of input values. Please indicate the input size...
    asked 26 minutes ago
  • True or False: a) A substance with high vapor pressure will typically have lower boiling point...
    asked 31 minutes ago
  • According to Oluo, why is the myth of the “model minority” important to understand, acknowledge, and...
    asked 51 minutes ago
  • How do you perform a meta-analysis for 3 treatments for fractured collarbone of a child?
    asked 51 minutes ago
  • Which of the following is not true? Question 22 options: Bitcoin and other cryptocurrencies are a...
    asked 1 hour ago
  • You are trying to optimize the classical five-stage pipeline used in your company. The current pipeline...
    asked 1 hour ago
  • 13. The stock market return data follow a normal distribution (Bell-Shape Curve). If the average annual...
    asked 1 hour ago
  • Suppose I choose to model a symmetrical distribution with the normal distribution without deleting values below...
    asked 1 hour ago
  • Item 1 In the case below, the original source material is given along with a sample...
    asked 1 hour ago
  • Benzophenone, 4-methylbenzyl bromide, 2,4,6-tribromophenol 1.Draw the structure of each reference compound and rank them in the...
    asked 1 hour ago