Berman Corporation uses standard costs with its job-order cost accounting system. In January, an order (Job No. 12) for 1,950 units of product B was received. The standard cost of one unit of product B is as follows:

Normal capacity for the month was 4,200 machine hours. During January, the following transactions applicable to Job No. 12 occurred:
1. Purchased 6,250 kg of raw materials on account at $1.06 per kilogram.
2. Requisitioned 6,250 kg of raw materials for Job No. 12.
3. Incurred 2,100 hours of direct labour at a rate of $7.75 per hour.
4. Worked 2,100 hours of direct labour on Job No. 12.
5. Incurred manufacturing overhead of $25,800 on account.
6. Applied overhead to Job No. 12 based on standard machine hours used.
7. Completed Job No. 12.
8. Billed customer for Job No. 12 at a selling price of $70,000.
9. Incurred selling and administrative expenses of $2,000 on account.
Instructions

(a) Journalize the transactions.

(b) Post to the job-order cost accounts.

(c) Prepare the entry to recognize the overhead variances.

(d) Prepare the January 2016 income statement for management.

Transcribed Image Text:

Direct materials Direct labour Overhead 3 kg at $1 per kilogram 1 hour at $8 per hour 2 hours (variable $4 per machine hour; $ 3.00 8.00 fixed $2.25 per machine hour) 12.50 $23.50 Standard cost per unit