Question

Standard Unit Cost and Journal Entries

The normal capacity of Algonquin Adhesives Inc. is 40,000 direct labor hours and 20,000 units per month. A finished unit requires 6 lb of materials at an estimated cost of $2 per pound. The estimated cost of labor is $10.00 per hour. The plant estimates that overhead (all variable) for a month will be $40,000.

During the month of March, the plant totaled 34,800 direct labor hours at an average rate of $9.50 an hour. The plant produced 18,000 units, using 105,000 lb of materials at a cost of $2.04 per pound.

Prepare a standard cost summary showing the standard unit cost.

Standard Cost Summary
Materials		$
Labor
Factory Overhead
Standard Cost Per Unit		$

2. Make journal entries to charge materials and labor to Work in Process. For a compound transaction, if an amount box does not require an entry, leave it blank or enter "0".

Answer 1

Requirement 1
		Standard Cost Summery
		Materials	12	=6*2
		Labor	20	=10*2
		Factory overhead	2	=40000/20000
		Standard cost per unit	34
Requirement 2
Date	General Journal
	Work In process		216000		=18000*12
		Raw Materials Inventory		216000
	To record charging of materials to work in process
	Work In process		360000		=18000*20
		Labor		360000
	To record the charging of labor to work in process
	Raw Materials Inventory		214200		=105000*2.04
		Cash/Accounts payable		214200
	To record the actual raw materials cost incurred
	Labor		330600		=34800*9.5
		Cash/Wages payable		330600
	To record the actual labor cost incurred