Question

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Canandaigua Container Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production-engineering staff and the controller.

  

Direct Labor:	Direct Material:
Quantity, 0.13 hour	Quantity, 6 kilograms
Rate, $6.50 per hour	Price, $0.36 per kilogram

  

Actual material purchases amounted to 112,000 kilograms at $0.400 per kilogram. Actual costs incurred in the production of 16,000 units were as follows:

Direct labor:	$16,200 for 2,400 hours
Direct material:	$40,000 for 100,000 kilograms

8.Prepare the following journal entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) Designate a credit or debit. Designate one of the following: No journal entry required, accounts payable, cost of finished goods, or cost of goods sold.

Record the purchase of direct material on account and the direct-material purchase price variance.

Record the addition of direct-material cost to work-in-process inventory and direct-material quantity variance.

Record the addition of direct-labor cost to work-in-process inventory and the direct-labor variances.

Record the closing of the direct materail and direct labor variances to cost of goods sold.

Required:

Post the journal entries prepared above to the appropriate T-accounts below. Be sure to select from the dropdown menu the transaction number associated with each amount posted.

  

value:
10.00 points

Required information

Answer 1

JOURNAL ENTRY
	Account Title	Debit	Credit
	Pirchase of direct material on account:
	Direct materials inventory	$        40,320		(112000*0.36)
	Direct materials price variance	$          4,480		(112000*(0.4-0.36)
	Accounts payable		$        44,800	(112000*0.4)
	Addition of direct material cost to WIP:
	Work in Process	$        34,560		(6*16000*0.36)
	Direct material quantity variance	$          1,440		(0.36*(100000-96000)
	Direct material inventory		$        36,000	(100000*0.36)
	Addition of direct labor cost to WIP:
	Work in process	$        13,520		(16000*0.13*6.5)
	Direct labor rate variance	$              600		(2400*(16200/2400)-6.5))=2400*(6.75-6.5)
	Direct labor efficiency variance	$          2,080		6.5*(2400-(16000*0.13))=6.5*(2400-2080)
	Wages payable		$16,200
	Closing of Variances
	Cost of goods sold	$          8,120
	Direct materials price variance		$          4,000	(100000*(0.4-0.36)
	Direct materials quantity variance		$          1,440
	Direct labor rate variance		$              600
	Direct labor efficiency variance		$          2,080