Water Movers, Inc. is known throughout the world for its H20-X high-capacity water pump, used in irrigation systems. The company uses a standard costing system, and the pump’s standard cost is as follows. The company’s predetermined fixed overhead rate is based on an expected capacity of 100,000 direct labor hours per month.

During the month of September, the company produced 22,000 of the 25,000 pumps that had been scheduled for production in the budget. The company used 382,000 pounds of material during September. The direct labor payroll for the month was $940,000 for 94,000 direct labor hours. Variable overhead costs were $740,000; fixed overhead costs were $540,000. The company’s purchasing agent signed a new supply contract that resulted in purchases of 500,000 pounds of direct materials at a price of $2,750,000.

Required

a. Prepare the journal entries to record the purchase and use of direct materials during September.

b. Prepare the journal entry to record the use of direct labor during September.

c. Prepare the journal entry to record actual variable overhead costs incurred.

d. Prepare the journal entry to record the application of variable overhead to production.

e. Prepare the journal entry to record actual fixed overhead costs incurred.

f. Prepare the journal entry to record the application of fixed overhead to production.

g. Prepare the journal entries to record the variable and fixed overhead variances.

h. Prepare the journal entry to close all variances to Cost of Goods Sold.

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Standard Price Standard Quantity Standard Cost $6 per pound $9 per DLH $8 per DLH $5 per DLH Direct materials 15 pounds $ 90 Direct labor 4 DLH 36 Variable overhead 4 DLH 32 Fixed overhead 4 DLH 20 $178