Question

Foding Corporation has supplied the following information obtained from its standard cost system in May:
Standard price of direct materials . . . . . . . . . . . . . . . . . . . . . . $7 per pound
Actual price of direct materials . . . . . . . . . . . . . . . . . . . . . . .. $6 per pound
Standard direct labor rate . . . . . . . . . . . . . . . . . . . . . . . . . . . $10 per pound
Actual direct labor hours in May . . . . . . . . . . . . . . . . . . . . . . . . 4,000 hours
The following journal entries were made during May with respect to Foding’s standard cost system:
Work in Process Inventory (at standard cost) . . . . . . . . . . . . . . . 9,500
Materials Quantity Variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000
Direct Materials Inventory (at actual cost) . . . . . . . . . . . . . . . . . . 9,000
Materials Price Variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500
To record the cost of direct materials used in May.
Work in Process Inventory (at standard cost) . . . . . . . . . . . . . . . . . 35,000
Labor Rate Variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000
Labor Efficiency Variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Direct Labor (at actual cost) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,000
To record the cost of direct labor charged to production in May.

Work in Process Inventory (at standard cost) . . . . . . . . . . . . . . . . . 28,000
Overhead Spending Variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
Overhead Volume Variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Manufacturing Overhead (at actual cost) . . . . . . . . . . . . . . . . . . . . 25,000
To apply overhead to production in May.

Instructions
a. Determine the actual quantity of materials purchased and used in production during May.
b. Determine the standard quantity of materials allowed for the production output achieved during May.
c. Determine the actual average direct labor rate in May.
d. Determine the standard direct labor hours allowed for the production output achieved during May.
e. Determine the total overhead costs allowed for the production output achieved during May.
f. Prepare a journal entry to record the transfer of all work in process to finished goods at the end of May.
g. Close all cost variances directly to the Cost of Goods Sold account at the end of May.
h. Was Foding’s production output in May more or less than its normal level of output? How can you tell?



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  • CreatedApril 17, 2014
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