Question

In: Accounting

James Company manufactures t-shirts. During the year, it manufactured 250,000 t-shirts, using 2 hours of direct...

James Company manufactures t-shirts. During the year, it manufactured 250,000 t-shirts, using 2 hours of direct labor at a rate of $8.50 per hour. The materials and labor standards for manufacturing the t-shirts are:

Direct materials (6 yards of fabric @ $3 per yard)

$18

Direct labor (2.4 hours @ $8.00 per hour)

17

It took James 1,400,000 yards at $2.50 per yard to make the 250,000 t-shirts.

What is the entry to record the purchase of materials?

a. debit Materials, 4,200,000

debit Materials Price Variance, 750,000

credit Accounts Payable, 4,950,000

b. debit Materials, 4,200,000

credit Materials Price Variance, 700,000

credit Accounts Payable, 3,500,000

c. debit Materials, 3,500,000

credit Materials Price Variance, 700,000

credit Accounts Payable, 4,200,000

d. debit Materials, 3,500,000

debit Materials Price Variance, 750,000

credit Accounts Payable, 4,250,000

Solutions

Expert Solution

  • Correct Answer = Option ‘B’

Accounts Titles

Debit

Credit

Raw material Inventory

$                                            4,200,000.00

Material Price variance

$      700,000.00

Accounts payable

$ 3,500,000.00

  • Working

Material Price Variance

(

Standard Rate

-

Actual Rate

)

x

Actual Quantity

(

$                                3.00

-

$                       2.50

)

x

1400000

700000

Variance

$          700,000.00

Favourable-F


Related Solutions

James Company manufactures t-shirts. During the year, it manufactured 250,000 t-shirts, using 2 hours of direct...
James Company manufactures t-shirts. During the year, it manufactured 250,000 t-shirts, using 2 hours of direct labor at a rate of $8.50 per hour. The materials and labor standards for manufacturing the t-shirts are: Direct materials (6 yards of fabric @ $3 per yard) $18 Direct labor (2.4 hours @ $8.00 per hour) 17 ​ It took James 1,400,000 yards at $2.50 per yard to make the 250,000 t-shirts. What is the entry to close the variances of labor and...
Gardener's Market manufactures hedgers. During the year, it manufactured 5,000 hedgers, using 4.2 hours of direct...
Gardener's Market manufactures hedgers. During the year, it manufactured 5,000 hedgers, using 4.2 hours of direct labor per hedger at a rate of $8. The materials and labor standards for manufacturing the hedgers are: Direct materials (10 units @ $2) $20 Direct labor (4 hours @ $7.50 per hour) 30 Gardener's Market actually purchased and used 53,000 units of direct materials at a price of $2.25 per unit. 1. Determine the materials price variance and whether it is favorable or...
Bumblebee Company estimates that 318,000 direct labor hours will be worked during the coming year, 2020,...
Bumblebee Company estimates that 318,000 direct labor hours will be worked during the coming year, 2020, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost data are computed for the year. Fixed Overhead Costs Variable Overhead Costs Supervision $93,960 Indirect labor $152,640 Depreciation 69,120 Indirect materials 89,040 Insurance 30,720 Repairs 31,800 Rent 20,760 Utilities 47,700 Property taxes 13,440 Lubricants 15,900 $228,000 $337,080 It is estimated that direct labor hours worked each month will range from 22,500...
Bumblebee Company estimates that 342,200 direct labor hours will be worked during the coming year, 2017,...
Bumblebee Company estimates that 342,200 direct labor hours will be worked during the coming year, 2017, in the Packaging Department. On this basis, the budgeted manufacturing overhead cost data are computed for the year. Fixed Overhead Costs Variable Overhead Costs Supervision $94,200 Indirect labor $143,724 Depreciation 77,280 Indirect materials 88,972 Insurance 30,960 Repairs 47,908 Rent 24,960 Utilities 51,330 Property taxes 23,160 Lubricants 17,110 $250,560 $349,044 It is estimated that direct labor hours worked each month will range from 22,700 to...
Crane Company estimates that 300,000 direct labor hours will be worked during the coming year, 2020,...
Crane Company estimates that 300,000 direct labor hours will be worked during the coming year, 2020, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost data are computed for the year. Fixed Overhead Costs Variable Overhead Costs Supervision $84,000 Indirect labor $120,000 Depreciation 66,000 Indirect materials 60,000 Insurance 24,000 Repairs 30,000 Rent 18,000 Utilities 45,000 Property taxes 12,000 Lubricants 15,000 $204,000 $270,000 It is estimated that direct labor hours worked each month will range from 20,000...
Bumblebee Company estimates that 402,600 direct labor hours will be worked during the coming year, 2020,...
Bumblebee Company estimates that 402,600 direct labor hours will be worked during the coming year, 2020, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost data are computed for the year. Fixed Overhead Costs Variable Overhead Costs Supervision $89,280 Indirect labor $169,092 Depreciation 73,440 Indirect materials 80,520 Insurance 26,040 Repairs 40,260 Rent 21,360 Utilities 60,390 Property taxes 22,440 Lubricants 40,260 $232,560 $390,522 It is estimated that direct labor hours worked each month will range from 22,800...
SallyMay, Inc., designs and manufactures T-shirts. It sells its T-shirts to brand name clothes retailers in...
SallyMay, Inc., designs and manufactures T-shirts. It sells its T-shirts to brand name clothes retailers in lots of one dozen. SallyMay's May 2013 static budget and actual results for direct inputs are as follows: Static Budget Number of T-shirt lots (1 lot1 dozen) 400 Per Lot of T-shirts: Direct materials 14 meters at $1.70 per meter$23.80 Direct manufacturing labor 1.6 hours at $8.10 per hour $12.96 Actual Results Number of T-shirt lots sold 450 Total Direct Inputs: Direct materials 6,840...
Tipton company manufactures shirts. During June Tipton made 1200 shirts but had budgeted production at 1400...
Tipton company manufactures shirts. During June Tipton made 1200 shirts but had budgeted production at 1400 shirts. Tipton gathered the following additional data: Variable overhead cost standard $0.50 per DLHr Direct labor efficiency standard 2.00 DLHr per shirt Actual amount of direct labor hours 2,520 DLHr Actual cost of variable overhead $1,512 Fixed overhead cost standard $0.25 per DLHr Budgeted fixed overhead $700 Actual cost of fixed overhead $750 13. Calculate the variable overhead cost variance. Select the formula, then...
Johnson Company applies overhead to products using direct labor hours as the activity level. During 2019,...
Johnson Company applies overhead to products using direct labor hours as the activity level. During 2019, Johnson Company had the following estimated costs: Direct materials .................... $278,000 Direct labor ........................ 255,000 (15,000 hours expected) Advertising ......................... 37,000 Rent on factory building ............ 38,000 Depreciation .................... ... 60,000 Indirect materials .................. 20,000 Sales commissions ................... 40,000 Production supervisor's salary ...... 50,000 Insurance on factory equipment ...... 18,000 CEO's salary ........................ 95,000 The following additional information is available: 1. 30% of the...
The demand for T-shirts is Q=20 – (P/2), where Q is the number of t-shirts and...
The demand for T-shirts is Q=20 – (P/2), where Q is the number of t-shirts and P is the price. The private cost of producing t-shirts is C(Q) = Q^2, with the private marginal cost being MC(P) = 2Q. Washing and dyeing t-shirts causes water pollution with marginal external costs of MC(E) = Q. A) Based on the above information, net welfare: consumer surplus + producer surplus - damages of consumption at market equilibrium is ______(no decimal point)...(numeric answer). Hint:...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT