Gibsen Manufacturing Company uses standard costs with its job order cost accounting system. In January, an order (Job No. 84) was received for 4,100 units of Product D. The standard cost of 1 unit of Product D is as follows.

Overhead is applied on the basis of direct labor hours. Normal capacity for the month of January was 4,500 direct labor hours. During January, the following transactions applicable to Job No. 84 occurred.
1. Purchased 6,100 pounds of raw materials on account at \(\$ 3.60\) per pound.
2. Requisitioned 6,100 pounds of raw materials for production.

3. Incurred 3,800 hours of direct labor at \(\$ 9.25\) per hour.
4. Worked 3,800 hours of direct labor on Job No. 84.
5. Incurred \(\$ 73,650\) of manufacturing overhead on account.
6. Applied overhead to Job No. 84 on the basis of direct labor hours.
7. Transferred Job No. 84 to finished goods.
8. Billed customer for Job No. 84 at a selling price of \(\$ 250,000\).
9. Incurred selling and administrative expenses on account \(\$ 61,000\).
Instructions:

(a) Journalize the transactions.

(b) Post to the job order cost accounts.

(c) Prepare the entry to recognize the total overhead variance.

(d) Prepare the income statement for management for January 2010.

Transcribed Image Text:

Direct materials-1.4 pounds at $4.00 per pound Direct labor-1 hour at $9.00 per hour Overhead 1 hour (variable $7.40; fixed $10.00) Standard cost per unit $ 5.60 9.00 17.40 $32.00