No. Account Titles and Explanation Debit Credit 1. (To record purchase of materi

Question

No.

Account Titles and Explanation

Debit

Credit

1.

(To record purchase of materials)

2.

(To record issuance of direct materials)

3.

(To record direct labor costs)

4.

(To assign factory labor to jobs)

5.

(To record overhead incurred)

6.

(To assign overhead to jobs)

7.

(To record transfer of completed work to finished goods)

More Hits Company manufactures aluminum baseball bats that it sells to university athletic departments. It has developed the following per unit standard costs for 2013 for each baseball bat:
Direct Materials Direct Labor Manufacturing
Overhead Standard Quantity 2 Pounds (Aluminum) 1/2 hour 1/2 hour Standard Price $4.00 $10.00 $6.00 Unit Standard Cost $8.00 $5.00 $3.00
In 2013, the company planned to produce 120,000 baseball bats at a level of 60,000 hours of direct labor.
Actual results for 2013 are presented below: 1. Direct materials purchases were 246,000 pounds of aluminum which cost $1,020,900. 2. Direct materials used were 220,000 pounds of aluminum. 3. Direct labor costs were $575,260 for 58,700 direct labor hours actually worked. 4. Total manufacturing overhead was $352,000. 5. Actual production was 114,000 baseball bats.

Explanation / Answer

More Hits Company Direct Material Direct labour Manufacturing Overhead Standard Quantity 2 pounds 1/2 hour 1/2 hour Standard Price 4 10 6 Unit Standard Cost 8 5 3 Planned Producton 120000 Planned hours 60000 Direct Material Cost Per unit of Raw Mateial cost Actual Purchase 246000 Pounds 1020900 4.15 Actual Material use 220000 Pounds Actual Labour hours Direct labour hours Cost Par Hour labour cost 58700 575260 9.8 Total Manufacturing overhead 352000 Actual Production 114000 (a) 1.) Direct Material Price Variance=(AQ*AP)-(AQ*SP) (246000*4.15)-(246000*4) $1,020,900-$9,84,000 36900(Unfavourable) 2.) Direct Material Quantiy Variance=(AQ*SP)-(SQ*SP) (2,20,000*4)-(228000*4) $8,80,000-$9,12,000 32000 (Favourable) SQ=(114000*2)=228000 3) Direct Labour Price Variance=(AH*AR)-(AH*SR) (58700*9.8)-(58700*10) 575260-587000 11740(Favourable) 4) Direct Labour Quantity variance=(AH*SR)-(SH*SR) (58700*10)-(57000*10) 587000-570000 17000(Unfavourable) Standard Hours=114000/2=57000 5.) Total overhead Variance=(Actual Overhead-Overhead Applied) $3,52,000-$3,42,000 $10,000(Unfavourable) Overhead applied=57000*6=$3,42,000 (b) Debit Credit 1 Raw Material Inventory 984000 Material Price Variance 36900              To Accounts Payable 1020900 2 Work in Process Inventory 912000             To Material Quantity Variance 32000             To Raw Material Inventory 880000 6 Work in Process Inventory 352000                To Manufactured Overhead 352000

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