Question

In: Accounting

Dash Company adopted a standard costing system several years ago. The standard costs for the prime...

Dash Company adopted a standard costing system several years ago. The standard costs for the prime costs (i.e., direct materials and direct labor) of its single product are:

Material (5 kilograms × $6.00 per kilogram) $ 30.00
Labor (6 hours × $18.50 per hour) 111.00

All materials are added at the beginning of processing. The following data were taken from the company’s records for November:

In-process beginning inventory None
In-process ending inventory
760
units, 75% complete as to direct labor
Units completed
5,800
units
Budgeted output
6,200
units
Purchases of materials
52,000
kilograms
Total actual direct labor costs $620,000
Actual direct labor hours
36,700
hours
Materials usage variance
$1,800
Unfavorable
Total materials variance
$760
Unfavorable

Required:

1. Compute for November:

a. The direct labor efficiency variance. Is this variance favorable (F) or unfavorable (U)?

b. The direct labor rate variance. Is this variance favorable (F) or unfavorable (U)?

c. The actual number of kilograms of material used in the production process during the month.

d. The actual price paid per kilogram of material during the month, the company calculates the direct materials price variance at point of purchase.

e. The amount of direct materials cost and direct labor cost transferred to the Finished Goods Inventory account.

f. The total amount of direct materials cost and direct labor cost in the Work-in-Process Inventory account at the end of the month.

2. Prepare journal entries to record all transactions, including the variances in requirement 1. ANSWER USING FOLLOWING INFORMATION:

  • Record the entry for the purchase of 52,000 kilograms of materials.
  • Record the entry for the issue of materials to production.
  • Record the entry for direct labor wages and standard direct labor cost incurred for manufacture.

REQUIREMENT 1 ANSWERED BELOW:

a. Direct labor efficiency variance $28,120 Favorable
b. Direct labor rate variance $58,950 Favorable
c. Actual number of kilograms 33,100 kg.
d. Actual price paid per kilogram of material $5.980
e. Amount transferred to the finished goods Inventory account $817,800
f. Ending inventory at standard cost $86,070

***REQUIREMENT 1 IS ANSWERED, ANSWERS PROVIDED RIGHT ABOVE. I NEED TO FIGURE OUT HOW TO DO REQUIREMENT 2. THANK YOU!! ***

Solutions

Expert Solution

Particulars Debit Credit
Materials Inventory           3,10,960
    Material Purchase Price Variance                 2,560
    Accounts Payable           3,08,400
Work-in-Process Inventory           1,96,800
    Materials Usage Variance                 1,138
    Materials Inventory           1,97,938
Work-in-Process Inventory           7,07,070
    Labor Rate Variance              58,950
    Labor Efficiency Variance              28,120
    Accrued payroll           6,20,000

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