In: Accounting
Jorgensen Corporation uses standard costs with its job order
cost accounting system. In January, an order (Job No. 12) for 1,000
units of Product B was received. The standard cost of one unit of
Product B is as follows.
Direct materials | 3 pounds at $1.00 per pound | $3.00 | ||
Direct labor | 1.00 hour at $8.00 per hour | 8.00 | ||
Overhead | 2 hours (variable $4.00 per machine hour; fixed $2.50 per machine hour) | 13.00 | ||
Standard cost per unit | $24.00 |
Normal capacity for the month was 4,000 machine hours. During
January, the following transactions applicable to Job No. 12
occurred.
1. | Purchased 3,100 pounds of raw materials on account at $1.04 per pound. | |
2. | Requisitioned 3,100 pounds of raw materials for Job No. 12. | |
3. | Incurred 1,040 hours of direct labor at a rate of $7.95 per hour. | |
4. | Worked 1,040 hours of direct labor on Job No. 12. | |
5. | Incurred manufacturing overhead on account $14,250. | |
6. | Applied overhead to Job No. 12 on basis of standard machine hours allowed. | |
7. | Completed Job No. 12. | |
8. | Billed customer for Job No. 12 at a selling price of $75,000. |
(a) Journalize the transactions.
(b) Post to the job order cost accounts.
(c) Prepare the entry to recognize the total overhead variance
Part A
No. |
General journal |
Debit |
Credit |
1 |
Raw materials (3100*1) |
3100 |
|
Materials price variance (3100*(1.04-1)) |
124 |
||
Accounts payable (3100*1.04) |
3224 |
||
2 |
Work in process inventory (3000*1) |
3000 |
|
Materials quantity variance (3100-3000)*1 |
100 |
||
Raw materials inventory |
3100 |
||
(1000*3) = 3000 |
|||
3 |
Factory labor (1040*8) |
8320 |
|
Labor price variance (1040*(8-7.95)) |
52 |
||
Wages payable (1040*7.95) |
8268 |
||
4 |
Work in process inventory (1000*8) |
8000 |
|
Labor quantity variance (1040-1000)*8 |
320 |
||
Factory labor |
8320 |
||
1040*1=1040 |
|||
5 |
Manufacturing overhead |
14250 |
|
Accounts payable |
14250 |
||
6 |
Work in process inventory (1000*2)*6.50 |
13000 |
|
Manufacturing overhead |
13000 |
||
7 |
Finished goods inventory (1000*24) |
24000 |
|
Work in process inventory |
24000 |
||
8. |
Accounts receivable |
75000 |
|
sales |
75000 |
||
Cost of goods sold |
24000 |
||
Finished goods inventory |
24000 |
Part B
Raw materials inventory
(1) |
3100 |
(2) |
3100 |
Materials price variance
(1) |
124 |
||
Work in process inventory
(2) |
3000 |
(7) |
24000 |
(4) |
8000 |
||
(6) |
5000 |
||
Factory labor
(3) |
8320 |
(4) |
8320 |
Materials quantity variance
(2) |
100 |
||
Finished goods inventory
(7) |
24000 |
(8) |
24000 |
Manufacturing overhead
(5) |
14250 |
(6) |
13000 |
Labor price variance
(3) |
52 |
||
Labor Quantity variance
(4) |
320 |
||
Cost of goods sold
(8) |
24000 |
||
Part C
No. |
General journal |
Debit |
Credit |
1 |
Overhead variance (14250-13000) |
1250 |
|
Manufacturing overhead |
1250 |