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Boron Chemical Company produces a synthetic resin that is used in the automotive industry. The company uses a standard cost system. For each gallon of
Boron Chemical Company produces a synthetic resin that is used in the automotive industry. The company uses a standard cost system. For each gallon of output, the following direct manufacturing costs are anticipated: Direct labor: 3.40 hours at $29.00 per hour Direct materials: 3.40 gallons at $24.00 per gallon $ 98.60 $ 81.60 During December of the current year, Boron produced a total of 2,640 gallons of output and incurred the following direct manufacturing costs: Direct labor: 8,850 hours worked at an average wage rate of $20.90 per hour Direct materials: Purchased: 9,600 gallons @ $24.45 per gallon Used in production: 9,100 gallons Boron records price variances for materials at the time of purchase. Required: Prepare journal entries for the following events and transactions. 1. Purchase, on credit, of direct materials. 2. Direct materials issued to production. 3. Direct labor cost of units completed this period. 4. Direct manufacturing cost (direct labor plus direct materials) of units completed and transferred to Finished Goods Inventory. 5. Sale (on credit), for $290 per gallon, of 2,000 gallons of output. (Hint: You will need two journal entries here.) (For all requirements, if no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amount.) Purchase, on credit, of direct materials. ote: Enter debits before credits. Transaction General Journal 01 Direct materials inventory Direct materials purchase-price variance Accounts payable Debit 230,400 Credit 4,320 234,720 Direct materials issued to production. te: Enter debits before credits. Transaction 02 General Journal Debit Credit Work-in-process inventory Direct materials usage variance Direct materials inventory 215,424 2,976 218,400 Direct labor cost of units completed this period. te: Enter debits before credits. Transaction General Journal Debit Credit 03 Work-in-process inventory 260,304 Direct labor rate variance 71,685 Direct labor efficiency variance 3,654 Salaries 184,965 Direct manufacturing cost (direct labor plus direct materials) of units completed and transferred to Finished Goods Inventory. ote: Enter debits before credits. Transaction General Journal Debit Credit 04 Finished goods inventory 475,728 Work-in-process inventory 475,728 Record the cost of goods sold for the sale. ote: Enter debits before credits. Transaction General Journal Debit Credit 5(a) Cost of goods sold 360,400 Finished goods inventory 360,400 Record the sale on account. te: Enter debits before credits. Transaction General Journal Debit Credit 5(b) Accounts receivable 580,000 Sales revenue 580,000
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