Question

Hans Enterprises is a large producer of birdseed. During June, the company produced 160 batches of crow bait. Each batch weighs 1,000 pounds. To produce this quantity of output, the company purchased and used 170,000 pounds of direct materials at a cost of $816,000. It also incurred direct labor costs of $20,000 for the 2,500 hours worked by employees on the crow bait crew. Manufacturing overhead incurred at the crow bait plant during June totaled $4,200, of which $3,100 was considered fixed. Hans’s standard cost information for each 1,000-pound batch of crow bait is as follows:
Direct materials standard price . . . . . . . . . . . . . . . . . . . . . . . . . $5.00 per pound
Standard quantity allowed per batch . . . . . . . . . . . . . . . . . . . . . 1,025 pounds
Direct labor standard rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $8.25 per hour
Standard hours allowed per batch . . . . . . . . . . . . . . . . . . . . . . . 15 direct labor hours
Fixed overhead budgeted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,200 per month
Normal level of production . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 batches per month
Variable overhead application rate . . . . . . . . . . . . . . . . . . . . . . $10.00 per batch
Fixed overhead application rate
($3,300 ÷150 batches) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.00 per batch
Total overhead application rate . . . . . . . . . . . . . . . . . . . . . . . . . $32.00 per batch

Instructions
a. Compute the materials price and quantity variances.
b. Compute the labor rate and efficiency variances.
c. Compute the manufacturing overhead spending and volume variances.
d. Record the journal entry to charge materials (at standard) to Work in Process.
e. Record the journal entry to charge direct labor (at standard) to Work in Process.
f. Record the journal entry to charge manufacturing overhead (at standard) to Work in Process.
g. Record the journal entry to transfer the 160 batches of crow bait produced in June to Finished Goods.
h. Record the journal entry to close any over- or underapplied overhead to Cost of Goods Sold.



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  • CreatedApril 17, 2014
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