Walton Corporation uses standard costs with its job order cost accounting system. In January an order (Job No. 12) for 2.000 units of Product B was received. The standard cost of one unit of Product H is as Follows.

Normal capacity for the month was 4,200 machine hours. During January, the following transactions applicable to Job No. 12 occurred.
1. Purchased 6,250 pounds ol raw materials on account at SI. 06 per pound.
2. Requisitioned 6,250 pounds ol raw materials for Job No, 12.

3. Incurred 2,200 hours of direct labor at a rate of \($7.80\) per hour.
4. Worked 2,200 hours of direct labor on Job No. 12.
5. Incurred manufacturing overhead on account $25,800.
6. Applied overhead to Job No. 12 on basis of standard machine hours used.
7. Completed Job No. 12.
8. Billed customer for Job No. 12 at a selling price of $70,000.
9. Incurred selling and administrative expenses on account $2,000.

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 January 2003 income statement for management.

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Direct materials Direct labor Overhead Standard cost per unit 3 pounds at $1.00 per pound 1 hour at $8.00 per hour 2 hours (variable $4.00 per machine hour. fixed $2.25 per machine hour) $ 3.00 8.00 12.50 $23.50