Actual results

The following actual costs and production data are reported at the plant at the end of the fiscal year (assume that the 2018 fiscal year has already ended):

100,000 slabs were produced.

The company purchased 130,000 tons of cement mix for $975,000.

120,000 tons of cement mix was used in production.

Direct labor costs incurred were $16,500 and 1,100 direct labor hours were worked during the year.

Actual fixed manufacturing overhead costs amounted to $175,000 and variable manufacturing overhead to $2,500.

EXHIBIT 1 - Summary of Direct and Overhead Cost Standards

Direct materials:

Cost of cement mix$10 per ton

Quantity of cement mix1 ton per slab

Standard cost per slab ($10 per ton x 1 ton per slab)$10 per slab

Direct labor:

Labor pay rate$10 per hour

Quantity of labor per unit of output100 slabs per labor hour

Standard cost per slab ($10 per hour x 1 hour per 100 slabs)0.10 cents per slab

Fixed manufacturing overhead:

Planned (budgeted) fixed overhead$180,000

Volume of allocation base (slabs produced)90,000 slabs

Standard cost per slab ($180,000 90,000 slabs)$2 per slab

Variable manufacturing overhead:

Planned (budgeted) variable overhead$ 80,000

Volume of allocation base (direct labor hours)40,000 direct labor hoursStandard cost per slab ($80,000 40,000 slabs)$2 per direct labor hour

Requirement

1. Prepare the necessary journal entries to record production costs and the corresponding cost variances for direct materials, direct labor, variable overhead and fixed manufacturing overhead.