Standard Unit Cost and Journal Entries The normal capacity of Algonquin Adhesive

Question

Standard Unit Cost and Journal Entries

The normal capacity of Algonquin Adhesives Inc. is 40,000 direct labor hours and 20,000 units per month. A finished unit requires 6 lb of materials at an estimated cost of $2 per pound. The estimated cost of labor is $10.00 per hour. The plant estimates that overhead (all variable) for a month will be $40,000.

During the month of March, the plant totaled 34,800 direct labor hours at an average rate of $9.50 an hour. The plant produced 18,000 units, using 105,000 lb of materials at a cost of $2.04 per pound.

Prepare a standard cost summary showing the standard unit cost.

Standard Cost Summary

   

Materials

$  

Labor

  

Factory Overhead

  

Standard Cost Per Unit

$  

2. Make journal entries to charge materials and labor to Work in Process. For a compound transaction, if an amount box does not require an entry, leave it blank or enter "0".

   

  

  

  

  

  

  

  

  

  

  

  

  

   

  

  

  

  

  

  

  

  

  

  

  

  

Standard Cost Summary

   

Materials

$  

Labor

  

Factory Overhead

  

Standard Cost Per Unit

$  

Explanation / Answer

Requirement 1 Standard Cost Summery Materials 12 =6*2 Labor 20 =10*2 Factory overhead 2 =40000/20000 Standard cost per unit 34 Requirement 2 Date General Journal Work In process 216000 =18000*12 Raw Materials Inventory 216000 To record charging of materials to work in process Work In process 360000 =18000*20 Labor 360000 To record the charging of labor to work in process Raw Materials Inventory 214200 =105000*2.04 Cash/Accounts payable 214200 To record the actual raw materials cost incurred Labor 330600 =34800*9.5 Cash/Wages payable 330600 To record the actual labor cost incurred

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