Standard Costs: Journal Entries and T-accounts: Armando Corporation manufactures a product with the following standard costs:

Standards are based on normal monthly production involving 2,400 direct labor- hours (600 units of output). Following are actual costs for the month of July:

Five hundred units of the product were actually produced in July and transferred to Finished Goods Inventory.

Required:

a. Prepare journal entries to record the above transactions for a traditional standard cost system.

b. Show the flow of these costs using T-accounts.

Transcribed Image Text:

Direct materials: 20 yards at $1.35 per yard Direct labor: 4 hours at $9 per hour Factory overhead-applied at five sixths of direct labor. Ratio of variable costs to fixed costs: 2 to 1 Total standard cost per unit of output $27 36 30 $93