Question

Sweetwater Company manufactures two products, Mountain Mist and Valley Stream. The company prepares its master budget on the basis of standard costs. The following data are for March.

Standards		Mountain Mist		Valley Stream
Direct materials		11 ounces at $15 per ounce		12 ounces at $16.50 per ounce
Direct labor		13 hours at $60 per hour		14 hours at $75 per hour
Variable overhead (per direct labor-hour)		$48		$52.50
Fixed overhead (per month)		$207,450		$699,200
Expected activity (direct labor-hours)		13,830		17,480
Actual results
Direct material (purchased and used)		11,180 ounces at $13.50 per ounce		13,900 ounces at $17.25 per ounce
Direct labor		12,820 hours at $60.75 per hour		17,400 hours at $76.50 per hour
Variable overhead		$642,550		$890,510
Fixed overhead		$186,705		$690,000
Units produced (actual)		1,000 units		1,200 units

Assume that the company carries no beginning or ending inventories. Sales in March totaled $3,190,000 for both products combined.

Required:

Prepare the journal entries to record the activity for the last month using standard costing. Assume that all variances are closed to Cost of Goods Sold at the end of the month.

Answer 1

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