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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: 2.90 hours at $24.00 per hour | $69.60 |
Direct materials: 2.90 gallons at $19.00 per gallon | $55.10 |
During December of the current year, Boron produced a total of 2,590 gallons of output and incurred the following direct manufacturing costs:
Direct labor: | 7,450 hours worked @ an average wage rate of $20.40 per hour |
Direct materials: | |
Purchased: | 8,200 gallons @ $19.45 per gallon |
Used in production: | 7,700 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, for $240 per gallon, of 2,100 gallons of output. (Hint: You will need two journal entries here.) |
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