Deporte Company produces single-colored t-shirts. Materials for the shirts are d

Question

Deporte Company produces single-colored t-shirts. Materials for the shirts are dyed in large vats. After dying the materials for a given color, the vats must be cleaned and prepared for the next batch of materials to be colored. The following standards for changeover for a given batch have been established:

1

Direct materials (2.2 lbs. @ $0.80)

$1.76

2

Direct labor (0.70 hr. @ $7.2)

5.04

3

Standard prime cost

$6.80

During the year, 66,150 pounds of material were purchased and used for the changeover activity. There were 27,000 batches produced, with the following actual prime costs:

Prepare a journal entry on Dec. 31 for the closing of variances to Cost of Goods Sold. Record the transaction as a compound entry.

Prepare the Dec. 31 journal entries for the (1) purchase of raw materials, (2) issuance of raw materials, (3) addition of labor to Work in Process, and the (4) closing of variances to Cost of Goods Sold. Refer to the Chart of Accounts for the exact wording of account titles. Record each transaction as a compound entry.

PAGE 10

GENERAL JOURNAL

Score: 127/185

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1

Direct materials (2.2 lbs. @ $0.80)

$1.76

2

Direct labor (0.70 hr. @ $7.2)

5.04

3

Standard prime cost

$6.80

Explanation / Answer

Journal Entries:

Date Accounts Titles and explanation Ref. Debit $ Credit $ Raw Material 141 52920 Accounts Payable 210 52920 (purchase of raw materrial) Work in process 142 47520 Raw Material 141 47520 (27000*2.2*0.80) Work in process 142 136080 Accrued Payroll 220 136080 (27000*0.7*7.2) Finished Goods 144 183600 Work in process 142 183600 (finished goods transferred) cost of Goods Sold 510 183600 Finished Goods 144 183600 (cost of goods sold ) Raw Material 141 5022 Cost of Goods Sold 510 5022 (Material Variance reversed to raw material - 47520-42498) Accrued Payroll 220 2629 Cost of Goods Sold 510 2629 (Labor Variance reversed to Accrued Payroll - 136080-133451)

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