Question

Dowd Co., which uses a standard costing system, has developed the following standard cost data based on a denominator volume of 60,000 direct labor hours (DLHs). Budgeted fixed overhead is $360,000 and budgeted variable overhead is $180,000 at this level of activity.

Direct material (3 lbs. @ $2.00 per lb.)	$6.00
Direct labor (0.5 hrs. @ $8.00 per hr.)	4.00
Factory overhead (0.5 hrs. $9.00 per hr.)	4.50
Total standard cost per unit	$14.50

During the last period, the company purchased 400,000 lbs. of material at a cost of $812,000. It incurred the following manufacturing costs to produce 128,000 units:

Actual costs incurred
Direct material (380,000 lbs)	$771,400
Direct labor (63,000 hrs.)	516,600
Variable overhead	220,000
Fixed overhead	365,000

Dowd uses two overhead accounts: factory overhead control and factory overhead applied. The company recognizes material price variances at the earliest point in time, i.e., at the point of purchase.

Required:

Given the above information, provide the correct journal entries for the following:

1. Purchase of material

2. Issuance of material to production

3. Direct labor cost for the period

4. Factory overhead applied to production

Answer 1