Pomona Manufacturing Company uses standard costs with its job order cost ac- counting system. In January, an order (Job 84) was received for 4,000 units of Product D. The standard cost ol 1 unit of Product D is as follows.

Overhead is applied on the basis of direct labor hours. Normal capacity for the month of January was 4,500 direct labor hours. During January, the following transactions applicable to Job No. 84 occurred.

1. Purchased 6,200 pounds of raw materials on account at \($3.50\) per pound.
2. Requisitioned 6,200 pounds of raw materials for production.
3. Incurred 3,900 hours of direct labor at \($9.25\) per hour.
4. Worked 3,900 hours of direct labor on Job No. 84.
5. Incurred \($73,650\) of manufacturing overhead on account.
6. Applied overhead to Job No. 84 on the basis of direct labor hours.
7. Transferred Job No. 84 to finished goods.
8. Billed customer for Job No. 84 at a selling price of $250,000.
9. Incurred selling and administrative expenses on account $61,000

Instructions

(a) Journalize the transactions.

(b) Post to the job order cost accounts.

(c) Prepare the entry to recognize the overhead variances.

(d) Prepare the income statement for management for January 2002.

Transcribed Image Text:

Direct materials-1.4 pounds at $4.00 per pound Direct labor-1 hour at $9.00 per hour Overhead 1 hour (variable $7.40; fixed $10.00) Standard cost per unit $ 5.60 9.00 17.40 $32.00