Flint, Inc. is known throughout the world for its H20-X high-capacity water pump, used in irrigation systems. The company uses a standard costing system, and the pump's standard cost is as follows. The company's predetermined fixed overhead rate is based on an expected capacity of 100,000 direct labor hours per month. Standard Price Standard Quantity Standard Cost Direct materials $7 per pound 16 pounds $112 Direct labor $8 per DLH 4 DLH 32 Variable overhead $7 per DLH 4 DLH 28 Fixed overhead $4 per DLH 4 DLH 16 $188 During the month of September, the company produced 22,200 of the 25,000 pumps that had been scheduled for production in the budget. The company used 407,000 pounds of material during September. The direct labor payroll for the month was $855,900 for 95,100 direct labor hours. Variable overhead costs were $653,300; fixed overhead costs were $445,300. The company's purchasing agent signed a new supply contract that resulted in purchases of 505,000 pounds of direct materials at a price of $3,333,000. (a) Prepare the journal entries to record the purchase and use of direct materials during September. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit 1. Raw Materials Inventory Direct Materials Price Variance Accounts Payable (To record the purchase of material) 2. Work in Process Inventory Direct Materials Quantity Variance Raw Materials Inventory (To record the use of material) (b) Prepare the journal entry to record the use of direct labor during September. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Work in Process Inventory Direct Labor Efficiency Variance Direct Labor Rate Variance Wages Payable (To record direct labor) (c) Prepare the journal entry to record actual variable overhead costs incurred. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Manufacturing Overhead Accounts Payable (To record actual variable manufacturing overhead) (d) Prepare the journal entry to record the application of variable overhead to production. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Work in Process Inventory Manufacturing Overhead (To record applied variable manufacturing overhead) (e) Prepare the journal entry to record actual fixed overhead costs incurred. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Manufacturing Overhead Accounts Payable (To record actual fixed manufacturing overhead) (f) Prepare the journal entry to record the application of fixed overhead to production. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Work in Process Inventory Manufacturing Overhead (To record applied fixed manufacturing overhead) (g) Prepare the journal entries to record the variable and fixed overhead variances. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit 1. Manufacturing Overhead Variable Overhead Efficiency Variance Variable Overhead Spending Variance (To record variable overhead variances) IN 2. Fixed Overhead Spending Variance Fixed Overhead Volume Variance Manufacturing Overhead (To record fixed overhead variances) (h) Prepare the journal entry to close all variances to Cost of Goods Sold. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Cost of Goods Sold Direct Materials Price Variance Variable Overhead Spending Variance Direct Materials Quantity Variance Direct Labor Rate Variance Direct Labor Efficiency Variance AN Variable Overhead Efficiency Variance Fixed Overhead Spending Variance Fixed Overhead Volume Variance (To close variances to Cost of Goods Sold)
