Acc400 Accounting for Decision Making: P24-4 American Hardwood Products uses standard costs

Acc400 Accounting for Decision Making

Problem 24.4 Computing and Journalizing Cost Variances
American Hardwood Products uses standard costs in a process cost system. At the end of the current month, the following information is prepared by the company's cost accountant
Direct materials Direct labor Manufacturing Overhead
Actual costs incurred 96,000 82,500 123,240
Standard costs 90,000 84,000 115,500
Materials price variance (favorable) 2,400
Materials quantity variance (unfavorable) 8,400
Labor rate variance (favorable) 3,000
Labor efficiency variance (unfavorable) 1,500
Overhead spending variance (unfavorable) 3,240
Overhead volume variance (unfavorable) 4,500

The total standard cost per unit of finished product is $30. During the current month, 9,000 units were completed and transferred to the finished goods inventory and 8,800 units were sold. The inventory of work in process at the end of the month consists of 1,000 units that are 65 percent completed. There was no inventory in process at the beginning of the month.

Instructions
a. Prepare journal entries to record all variances and the costs incurred (at standard) in the Work in Process account.
Prepare separate compound entries for:
(1) direct materials
(2) direct labor
(3) manufacturing overhead
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