Question
Fayman Manufacturing Company uses standard costs with its job-order cost accounting system. In January, an order (Job 84) was received for 5,900 units of product
Fayman Manufacturing Company uses standard costs with its job-order cost accounting system. In January, an order (Job 84) was received for 5,900 units of product D. The standard cost of one unit of product D is as follows:
Direct materials1.65 kg at $3.00 per kilogram | $ 4.95 | |
Direct labour1 hour at $10 per hour | 10.00 | |
Overhead1 hour (variable $7.69; fixed $8.21) | 15.90 | |
Standard cost per unit | $30.85 |
Overhead is applied based on direct labour hours. Normal capacity for the month of January was 6,500 direct labour hours. During January, the following transactions applicable to Job No. 84 occurred:
1. | Purchased 10,325 kg of raw materials on account at $2.40 per kilogram. | |
2. | Requisitioned 10,325 kg of raw materials for production. | |
3. | Incurred 5,310 hours of direct labour at $10.20 per hour. | |
4. | Worked 5,310 hours of direct labour on Job No. 84. | |
5. | Incurred $94,840 of manufacturing overhead on account. | |
6. | Applied overhead to Job No. 84 based on the direct labour hours. | |
7. | Transferred Job No. 84 to finished goods. | |
8. | Billed customer for Job No. 84 at a selling price of $270,515. | |
9. | Incurred selling and administrative expenses of $64,500 on account. |
( a) Journalize the transactions.
(b) Post to the job order cost accounts.
(c) Prepare the entry to recognize the total overhead variance
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