(Click the icon to view the information) Premium Company reported the following variances (Click the icon to view the variances) Premium produced 1,000 units of finished product in 2018 Read the remonts Begin by oumating the purchase of direct materials on account, including the related variance (Prepare a single compound journal entry) Date Accounts and Explanation Debit Credit Data Table 5 Direct materials cost variance Direct materials officiency variance Direct labor cost variance Direct labor efficiency variance Variable overhead cost variance Variable overhead officiency variance Fixed overhead cost variance Fixed overhead volume variance 1200 660 F 700 F 5,850 F 800U 800 F 900 U 2,100F Requirements Data Table Record the journal entries to record direct materials, director, Variable Overhead, and feed overhead, assuming al expenditures were on account and There were no beginning or ending balance in the vertory cours (wi materials purchased were used in production, and all goods produced were sot). Record the journal entries to record the vaner to Finished Goods Inventory and Cost of Goods Sold (om the journal entry for Sales Revenue) Adjust the Manufacturing Overhead account. (Record debits first, then credits. Select the explanation on the lastne of the journal entry table) Standards yards of cloth per unit$1.10 per yard 2 dret bor hours per $0.75 per hour Overhead alocated at $4.00 per direct labor hour Actual 2.400 yards of cloth were purchased at $1.15 per yard Employees worked 1,400 hours and were paid $0.25 per hour Actual variable overhead was $2,200 Actual fred overhead was $4.000 Print Done Help Me Solve This lud Question Help Premium Company uses a standard cost system and reports the following information for 2018: (Click the icon to view the information.) Premium Company reported the following variances: Click the icon to view the variances.) Premium produced 1,000 units of finished product in 2018. Read the requirements. Standard cost accounting systems allow managers to understand why actual costs differ from budgeted costs. Management needs to know about variances from standards to address any potential problems right away. This is the reason variances are recorded as soon as possible. When recording variances, favorable variances are credited and unfavorable variances are debited. Remember that variances are considered favorable if they increase operating income-and operating income is increased with credits (like revenues). Variances are considered unfavorable if they decrease operating income-and operating income is decreased with debits (like expenses). Record the purchase of direct materials on account. Deluxe records a Direct Materials Cost Variance when materials are purchased. The Raw Materials Inventory account is debited for the oor actual quantity of material purchases (2,400 yards of cloth) at the standard cost (1.15 per yard). Accounts payable is credited for the rec actual quantity of material purchased (2,400 yards of cloth) at the actual cost (1.20 per yard). This is the actual amount owed to the aco vendor. Maintaining Raw Materials Inventory at the 1.15 standard cost allows Deluxe, Inc. to record the direct materials cost variance at the time of purchase. Calculate the actual quantities at standard costs now. Actual quantity of material used Standard cost Total cost at standard 2,400 2,760 ver ver t th he 1.15 Calculate the actual cost of the materials purchased. Actual quantity of material used x Actual cost = Total actual cost of materials 2.400 * $ 1.20 2,880 Now journalize the purchase of direct materials on account, including the related variance. Recall that Deluxe's direct materials cost variance was $120 unfavorable. An unfavorable variance means more expense has been incurred than planned and would have a debit balance. (Prepare a single compound journal entry) Date Accounts and explanation Debit Credit Raw Materials Inventory 2,760 Direct Materials Cost Variance 120 Accounts Payable Purchased direct materials. 2,880 or th Record the use of direct materials, including the related variance. In the next transaction, Deluxe debits Work-in-Process Inventory for the standard cost of the standard quantity of direct materials that should have been used to make 1,000 units of the company's product in 2018. This maintains Work-in-Process Inventory at standard cost. Raw Materials Inventory is credited for the actual quantity of materials put into production (2,400 yards of cloth) at the standard cost (1.15 per yard). The difference will be the Direct Materials Efficiency Variance. Calculate the standard input quantities at standard costs now. Standard quantity of direct materials x Standard cost - Standard cost of direct materials 3,000 1.15 3,450 Record the use of direct materials now. Recall that Deluxe's Direct Materials Efficiency Variance was $690 favorable. A favorable variance has a credit balance and is a contra-expense. (Prepare a single compound journal entry) Date Accounts and Explanation Debit Credit Work-in-Process Inventory 3,450 Direct Materials Efficiency Variance 690 2,760 $ X $ Raw Materials Inventory Used direct materials. Record the incurrence of direct labor. In the next transaction, Work-in-Process Inventory is debited for the 10.25 per hour standard cost of the standard quantity of direct labor hours that should have been used to make 1,000 units of the company's product in 2018. This maintains Work-in-Process Inventory at standard cost. Wages Payable is credited for the actual cost (the actual hours worked at the actual wage rate) because this is the amount Deluxe must pay the workers. Both the Direct Labor Cost Variance and the Direct Labor Efficiency Variance will also be adjusted for their respective amounts, which are given in the problem statement. First calculate the standard quantities at standard costs. Standard quantity of direct labor hours x Standard cost Standard cost of labor 2,000 * $ 10.25 20,500 Now, calculate the actual quantities at actual prices. Actual quantity of labor used Actual cost of labor 1,200 9.75 11,700 abor ered aco wer Inver jst the the Actual cost Joumalize the incurrance and assignment of direct labor costs, including the related variances. Recall that Deluxe's Direct Labor Cost Variance was $600 favorable, and the Direct Labor Efficiency Variance was $8,200 favorable. (Prepare a single compound journal entry) Date Accounts and explanation Debit Credit Work-in-Process Inventory 20,500 Direct Labor Cost Variance 600 Direct Labor Efficiency Variance 8,200 Wages Payable 11,700 Direct labor costs incurred. or Record the actual overhead cost for 2018 We have been told that Deluxe's actual variable overhead for 2018 was $5.000 and actual fixed overhead was $1,600. The sum of these two amounts is debited to the Manufacturing Overhead account and is credited to various other accounts, which may include Cash, Accounts Payable, Accumulated Depreciation, Prepaid Insurance, or other related overhead accounts. (In this scenario, we'll call the account "Various Accounts") Go ahead and journalize the entry to show the actual manufacturing overhead costs incurred. Date Accounts and Explanation Debit Manufacturing Overhead 6,600 Various Accounts 6,600 Manufacturing overhead costs incurred. Credit Remember that overhead is applied to production using the standard overhead rate of 4.00 per direct labor hour multiplied by the standard quantity of direct labor hours, which we determined to be 2,000 hours in a previous step. When overhead is applied to inventory, the Work-in-Process inventory account is debited, and the Manufacturing Overhead account is credited. Date Accounts and Explanation Debit Credit Work-in-Process Inventory 8,000 Manufacturing Overhead 8,000 Manufacturing overhead costs allocated. or Journalize the movement of all production from Work-in-Process Inventory Once the production process is complete, all of the previously allocated standard costs are transferred from Work-in-Process Inventory to Finished Goods Inventory. Record the entry er Accounts and Explanation Debit Credit Finished Goods Inventory 31,950 Work-in-Process Inventory 31,950 Completed goods transforred. ee wer Date th e Upon the sale of the items, Deluxe will transfer all of the standard costs from Finished Goods Inventory to the entry Date Accounts and Explanation Debit Credit Cost of Goods Sold 31,950 Finished Goods Inventory 31,950 Cost of sales at standard cost. rect labor es were entory duced wer Close the Manufacturing overhead account and record the overhead variances. Remember that we debited the Manufacturing Overhead account by the actual overhead costs incurred, $6,600, and credited it by the overhead costs applied to the inventory. $8,000. The difference is due to the variable and fixed overhead variances. To close out the Manufacturing Overhead account, we must record these variances, debiting the Manufacturing Overhead account for the difference. The debit to Manufacturing Overhead indicates that the actual overhead costs debited to the account were less than the allocated amounts credited to the account and overhead was overallocated. Remember that the unfavorable variable overhead and fixed overhead cost variances will be recorded with debits and the favorable variable overhead efficiency and fixed overhead volume variances will be recorded with credits. (Prepare a single compound journal entry.) Date Accounts and Explanation Debit Credit Manufacturing Overhead 1,400 Fixed Overhead Cost Variance po Variable Overhead Cost Variance 1.100 Variable Overhead Efficiency Variance 1,100 Fixed Overhead Volume Variance 1,500 To adjust Manufacturing Overhead er er th (Click the icon to view the information) Premium Company reported the following variances (Click the icon to view the variances) Premium produced 1,000 units of finished product in 2018 Read the remonts Begin by oumating the purchase of direct materials on account, including the related variance (Prepare a single compound journal entry) Date Accounts and Explanation Debit Credit Data Table 5 Direct materials cost variance Direct materials officiency variance Direct labor cost variance Direct labor efficiency variance Variable overhead cost variance Variable overhead officiency variance Fixed overhead cost variance Fixed overhead volume variance 1200 660 F 700 F 5,850 F 800U 800 F 900 U 2,100F Requirements Data Table Record the journal entries to record direct materials, director, Variable Overhead, and feed overhead, assuming al expenditures were on account and There were no beginning or ending balance in the vertory cours (wi materials purchased were used in production, and all goods produced were sot). Record the journal entries to record the vaner to Finished Goods Inventory and Cost of Goods Sold (om the journal entry for Sales Revenue) Adjust the Manufacturing Overhead account. (Record debits first, then credits. Select the explanation on the lastne of the journal entry table) Standards yards of cloth per unit$1.10 per yard 2 dret bor hours per $0.75 per hour Overhead alocated at $4.00 per direct labor hour Actual 2.400 yards of cloth were purchased at $1.15 per yard Employees worked 1,400 hours and were paid $0.25 per hour Actual variable overhead was $2,200 Actual fred overhead was $4.000 Print Done Help Me Solve This lud Question Help Premium Company uses a standard cost system and reports the following information for 2018: (Click the icon to view the information.) Premium Company reported the following variances: Click the icon to view the variances.) Premium produced 1,000 units of finished product in 2018. Read the requirements. Standard cost accounting systems allow managers to understand why actual costs differ from budgeted costs. Management needs to know about variances from standards to address any potential problems right away. This is the reason variances are recorded as soon as possible. When recording variances, favorable variances are credited and unfavorable variances are debited. Remember that variances are considered favorable if they increase operating income-and operating income is increased with credits (like revenues). Variances are considered unfavorable if they decrease operating income-and operating income is decreased with debits (like expenses). Record the purchase of direct materials on account. Deluxe records a Direct Materials Cost Variance when materials are purchased. The Raw Materials Inventory account is debited for the oor actual quantity of material purchases (2,400 yards of cloth) at the standard cost (1.15 per yard). Accounts payable is credited for the rec actual quantity of material purchased (2,400 yards of cloth) at the actual cost (1.20 per yard). This is the actual amount owed to the aco vendor. Maintaining Raw Materials Inventory at the 1.15 standard cost allows Deluxe, Inc. to record the direct materials cost variance at the time of purchase. Calculate the actual quantities at standard costs now. Actual quantity of material used Standard cost Total cost at standard 2,400 2,760 ver ver t th he 1.15 Calculate the actual cost of the materials purchased. Actual quantity of material used x Actual cost = Total actual cost of materials 2.400 * $ 1.20 2,880 Now journalize the purchase of direct materials on account, including the related variance. Recall that Deluxe's direct materials cost variance was $120 unfavorable. An unfavorable variance means more expense has been incurred than planned and would have a debit balance. (Prepare a single compound journal entry) Date Accounts and explanation Debit Credit Raw Materials Inventory 2,760 Direct Materials Cost Variance 120 Accounts Payable Purchased direct materials. 2,880 or th Record the use of direct materials, including the related variance. In the next transaction, Deluxe debits Work-in-Process Inventory for the standard cost of the standard quantity of direct materials that should have been used to make 1,000 units of the company's product in 2018. This maintains Work-in-Process Inventory at standard cost. Raw Materials Inventory is credited for the actual quantity of materials put into production (2,400 yards of cloth) at the standard cost (1.15 per yard). The difference will be the Direct Materials Efficiency Variance. Calculate the standard input quantities at standard costs now. Standard quantity of direct materials x Standard cost - Standard cost of direct materials 3,000 1.15 3,450 Record the use of direct materials now. Recall that Deluxe's Direct Materials Efficiency Variance was $690 favorable. A favorable variance has a credit balance and is a contra-expense. (Prepare a single compound journal entry) Date Accounts and Explanation Debit Credit Work-in-Process Inventory 3,450 Direct Materials Efficiency Variance 690 2,760 $ X $ Raw Materials Inventory Used direct materials. Record the incurrence of direct labor. In the next transaction, Work-in-Process Inventory is debited for the 10.25 per hour standard cost of the standard quantity of direct labor hours that should have been used to make 1,000 units of the company's product in 2018. This maintains Work-in-Process Inventory at standard cost. Wages Payable is credited for the actual cost (the actual hours worked at the actual wage rate) because this is the amount Deluxe must pay the workers. Both the Direct Labor Cost Variance and the Direct Labor Efficiency Variance will also be adjusted for their respective amounts, which are given in the problem statement. First calculate the standard quantities at standard costs. Standard quantity of direct labor hours x Standard cost Standard cost of labor 2,000 * $ 10.25 20,500 Now, calculate the actual quantities at actual prices. Actual quantity of labor used Actual cost of labor 1,200 9.75 11,700 abor ered aco wer Inver jst the the Actual cost Joumalize the incurrance and assignment of direct labor costs, including the related variances. Recall that Deluxe's Direct Labor Cost Variance was $600 favorable, and the Direct Labor Efficiency Variance was $8,200 favorable. (Prepare a single compound journal entry) Date Accounts and explanation Debit Credit Work-in-Process Inventory 20,500 Direct Labor Cost Variance 600 Direct Labor Efficiency Variance 8,200 Wages Payable 11,700 Direct labor costs incurred. or Record the actual overhead cost for 2018 We have been told that Deluxe's actual variable overhead for 2018 was $5.000 and actual fixed overhead was $1,600. The sum of these two amounts is debited to the Manufacturing Overhead account and is credited to various other accounts, which may include Cash, Accounts Payable, Accumulated Depreciation, Prepaid Insurance, or other related overhead accounts. (In this scenario, we'll call the account "Various Accounts") Go ahead and journalize the entry to show the actual manufacturing overhead costs incurred. Date Accounts and Explanation Debit Manufacturing Overhead 6,600 Various Accounts 6,600 Manufacturing overhead costs incurred. Credit Remember that overhead is applied to production using the standard overhead rate of 4.00 per direct labor hour multiplied by the standard quantity of direct labor hours, which we determined to be 2,000 hours in a previous step. When overhead is applied to inventory, the Work-in-Process inventory account is debited, and the Manufacturing Overhead account is credited. Date Accounts and Explanation Debit Credit Work-in-Process Inventory 8,000 Manufacturing Overhead 8,000 Manufacturing overhead costs allocated. or Journalize the movement of all production from Work-in-Process Inventory Once the production process is complete, all of the previously allocated standard costs are transferred from Work-in-Process Inventory to Finished Goods Inventory. Record the entry er Accounts and Explanation Debit Credit Finished Goods Inventory 31,950 Work-in-Process Inventory 31,950 Completed goods transforred. ee wer Date th e Upon the sale of the items, Deluxe will transfer all of the standard costs from Finished Goods Inventory to the entry Date Accounts and Explanation Debit Credit Cost of Goods Sold 31,950 Finished Goods Inventory 31,950 Cost of sales at standard cost. rect labor es were entory duced wer Close the Manufacturing overhead account and record the overhead variances. Remember that we debited the Manufacturing Overhead account by the actual overhead costs incurred, $6,600, and credited it by the overhead costs applied to the inventory. $8,000. The difference is due to the variable and fixed overhead variances. To close out the Manufacturing Overhead account, we must record these variances, debiting the Manufacturing Overhead account for the difference. The debit to Manufacturing Overhead indicates that the actual overhead costs debited to the account were less than the allocated amounts credited to the account and overhead was overallocated. Remember that the unfavorable variable overhead and fixed overhead cost variances will be recorded with debits and the favorable variable overhead efficiency and fixed overhead volume variances will be recorded with credits. (Prepare a single compound journal entry.) Date Accounts and Explanation Debit Credit Manufacturing Overhead 1,400 Fixed Overhead Cost Variance po Variable Overhead Cost Variance 1.100 Variable Overhead Efficiency Variance 1,100 Fixed Overhead Volume Variance 1,500 To adjust Manufacturing Overhead er er th