PROBLEM 24.8A

Understanding Cost Variances: Solving for Missing Data

Ripley Corporation has supplied the following information obtained from its standard cost system in June.

Instructions

Determine the actual quantity of materials purchased and used in production during June.

Determine the standard quantity of materials allowed for the productive output achieved during June.

Determine the actual average direct labor rate in June.

Determine the standard direct labor hours allowed for the production output achieved during June.

Determine the total overhead costs allowed for the production output achieved during June.

Prepare a journal entry to record the transfer of all work in process to finished goods at the end of June.

Close all cost variances directly to the Cost of Goods Sold account at the end of June.

Was Ripleys production output in June more or less than its normal level of output? How can you tell?

Standard price of direct materials $6 per pound Actual price of direct materials $5 per pound Standard direct labor rate $9 per hour Actual direct labor hours in June 9,500 hours The following journal entries were made during June with respect to Ripley's standard cost system. Work in Process Inventory (at standard cost) 48,000 Materials Quantity Variance 1,200 Direct Materials Inventory (at actual cost) 41,000 Materials Price Variance. 8,200 To record the cost of direct materials used in June. Work in Process Inventory (at standard cost) 81,000 Labor Rate Variance. Labor Efficiency Variance Direct Labor (at actual cost) 86,450 To record the cost of direct labor charged to production in June. Work in Process Inventory (at standard cost) 25,000 Overhead Spending Variance 2,000 Overhead Volume Variance 5,000 Manufacturing Overhead (at actual cost). 22,000 To apply overhead to production in June