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Problem #2: Standard Costing Ultra, Inc. manufactures and sells a full line of sunglasses. The company uses a standard cost system. Department managers' are held
| Problem #2: Standard Costing | ||||||
| Ultra, Inc. manufactures and sells a full line of sunglasses. The company uses a standard cost system. Department | ||||||
| managers' are held responsible for the explanation of the variances in their department performance reports. | ||||||
| Recently, the variances in the Prestige line of sunglasses have been of concern. Data for the month of August is | ||||||
| presented below. Assume beginning and ending inventory levels for WiP and FG are zero. | ||||||
| Static Budget | Actual | |||||
| revenues | $600,000 | $625,000 | ||||
| DM | $150,000 | $163,400 | ||||
| DL | $135,000 | $138,700 | ||||
| FOH (cost driver = DL hours) | $114,000 | $121,000 | ||||
| gross profit | $201,000 | $201,900 | ||||
| selling price per Prestige sunglass | $76.92 | $76.22 | ||||
| DM (total # ounces) | 15,600 | 16,100 | ||||
| DL rate ($ per DL hour) | $18.00 | $19.55 | ||||
| (1) | Prepare the journal entry for the purchase of DM. Assume DM ourchases = DM used. (2 points) | |||||
| DM inventory | ||||||
| DM spending variance | ||||||
| accounts payable | ||||||
| (2) | Prepare the journal entry for the release of DM into production. (2 points) | |||||
| WiP inventory | ||||||
| DM efficiency variance | ||||||
| DM inventory | ||||||
| (3) | Prepare the journal entries for DL. (4 points) | |||||
| DL expense | ||||||
| wages payable | ||||||
| WiP inventory | ||||||
| DL efficiency variance | ||||||
| DL spending variance | ||||||
| DL expense | ||||||
| (4) | Prepare the journal entries for FOH. (4 points) | |||||
| FOH expenses | ||||||
| accounts payable | ||||||
| mfg FOH control | ||||||
| FOH expenses | ||||||
| WiP inventory | ||||||
| mfg FOH control | ||||||
| mfg FOH control | ||||||
| FOH volume variance | ||||||
| FOH spending variance | ||||||
| (5) | Prepare the adjusting entries to close out the variance accounts. (4 points) | |||||
| DM spending variance | ||||||
| CGS | ||||||
| DM efficiency variance | ||||||
| CGS | ||||||
| DL spending variance | ||||||
| CGS | ||||||
| DL efficiency variances | ||||||
| CGS | ||||||
| FOH volume variance | ||||||
| CGS | ||||||
| FOH spending variance | ||||||
| CGS | ||||||
| (6) | Complete the CGS T-Account below. (4 points) | |||||
| CGS | ||||||
| DM @ std | ||||||
| DL @ std | ||||||
| FOH @ std | ||||||
| Adjustments to CGS | ||||||
| Adjusted CGS | ||||||
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HR Self Audits A Strategy For Continuous Improvement
Authors: Wynette Harewood, Marilyn Silverman
1st Edition
B0BQXT8R3P, 979-8843293192
