Tolbert Manufacturing Company uses a standard cost system in accounting for the cost of production of its
Question:
Tolbert Manufacturing Company uses a standard cost system in accounting for the cost of production of its only product, Product A. The standards for the production of one unit of Product \(\mathrm{A}\) are as follows:
Direct materials: 10 feet of item 1 at \(\$ .75\) per foot and 3 feet of item 2 at \(\$ 1.00\) per foot. Direct labor: 4 hours at \(\$ 3.50\) per hour.
There was no inventory on hand at July \(1,20 \mathrm{X} 0\). Following is a summary of costs and related data for the production of Product A during the year ended June 30, 20X1.
100,000 feet of item 1 were purchased at \(\$ .78\) per foot.
30,000 feet of item 2 were purchased at \(\$ .90\) per foot.
8,000 units of Product A were produced which required 78,000 feet of item \(1,26,000\) feet of item 2 and 31,000 hours of direct labor at \(\$ 3.60\) per hour.
6,000 units of Product A were sold.
At June 30, 20X1, there are 22,000 feet of item 1, 4,000 feet of item 2, and 2,000 completed units of Product A on hand. All purchases and transfers are "charged in" at standard. The beginning balances in all variance accounts is zero.
(a) From the above data, show entries recording the following:
(1) Purchase of raw material,
(2) Issue of raw material for production,
(3) Direct labor costs.
(b) Compute the ending balance in the following accounts:
(1) Raw materials inventory,
(2) Materials quantity variance,
(3) Materials price variance.
Step by Step Answer:
Cost Accounting For Managerial Planning Decision Making And Control
ISBN: 9781516551705
6th Edition
Authors: Woody Liao, Andrew Schiff, Stacy Kline