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Assessment 4 Part 1: Standard Cost Summary and Related Journal Entries The normal capacity of Central...

Assessment 4 Part 1: Standard Cost Summary and Related Journal Entries
The normal capacity of Central Manufacturing Company is 45,000 direct labor hours and 20,000 units per month. A finished unit requires 6 pounds of materials at an estimated cost of $2 per pound. The estimated cost of labor is $10 per hour. The plant estimates that overhead for a month will be $40,000. During the month of March, the plant totaled 41,800 direct labor hours at an average rate of $9.50 an hour. The plant produced 18,000 units, using 105,000 pounds of materials at a cost of $2.04 per pound.
Using this spreadsheet, prepare (a) a standard cost summary showing standard unit cost, and (b) journal entries to charge materials and labor to work-in-process.
Standard Cost Summary
Materials (6 lbs. @ $2.00 per lb.):
Labor:
Factory overhead:
Standard cost per unit:
Work in Process : Materials
Materials Price Variance (U)
Materials Quantity Variance (F)
Materials
Work in Process : Labor
Labor Efficiency Variance (F)
Labor Rate Variance (F)
Payroll
Assessment 4 Part 1: Standard Cost Summary and Related Journal Entries
The normal capacity of Central Manufacturing Company is 45,000 direct labor hours and 20,000 units per month. A finished unit requires 6 pounds of materials at an estimated cost of $2 per pound. The estimated cost of labor is $10 per hour. The plant estimates that overhead for a month will be $40,000. During the month of March, the plant totaled 41,800 direct labor hours at an average rate of $9.50 an hour. The plant produced 18,000 units, using 105,000 pounds of materials at a cost of $2.04 per pound.
Using this spreadsheet, prepare (a) a standard cost summary showing standard unit cost, and (b) journal entries to charge materials and labor to work-in-process.
Standard Cost Summary
Materials (6 lbs. @ $2.00 per lb.):
Labor:
Factory overhead:
Standard cost per unit:
Work in Process : Materials
Materials Price Variance (U)
Materials Quantity Variance (F)
Materials
Work in Process : Labor
Labor Efficiency Variance (F)
Labor Rate Variance (F)
Payroll
Business   Accounting   
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Answer #1
Standard Cost Summary
Materials (6 lbs. @ $2.00 per lb.): $12
Labor: (2.25 hours @$10 per hour 22.5
Factory overhead (2.25 hours $.9) 2.025
Standard cost per unit: $36.53
Work in Process : Materials
Materials Price Variance (U) 4200 U
(AQ*AR)-(AQ*Sr)
(105000*2.04)-(105000*2)
Materials Quantity Variance (F) 6000 F
SR*(AQ-SQ allowed) -6000
2*(105000-(18000*6))
Material (105000*2.04) 214200
Work in Process : Labor
Labor Efficiency Variance (F)
SR*(AH-SH allowed)
10*(41800-(18000*2.25)) 13000 U
Payroll (41800*9.5) 37620
Labor rate variance
(AH*AR)-(AH*Sr) 20900 F
(41800*9.5)-(41800*10) -20900
No. of hours
labor 45000/20000 2.250
Ans 2 Journatl entry
Dr Cr
Raw material Inventory (105000*2) 210000
Material Price Variance 4200
Accounts Payable (105000*2.04) 214200
Work in process Inventory (18000*6*2) 216000
Materials Quantity Variance 6000
Raw material Inventory 210000
Work in process Inventory (18000*2.25*10) 405000
Labor Efficiency Variance 13000
Labor rate Variance 20900
Wages payable (41800*9.5) 397100
Work in process 37620
Factory overhead 37620
(41800*.9)
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