Question
Pronghorn, Inc. is known throughout the world for its H2O-X high-capacity water pump, used in irrigation systems. The company uses a standard costing system, and
Pronghorn, Inc. is known throughout the world for its H2O-X high-capacity water pump, used in irrigation systems. The company uses a standard costing system, and the pumps standard cost is as follows. The companys predetermined fixed overhead rate is based on an expected capacity of 76,800 direct labor hours per month.
Standard Price | Standard Quantity | Standard Cost | ||||||
---|---|---|---|---|---|---|---|---|
Direct materials | $7 per pound | 16 pounds | $112 | |||||
Direct labor | $8 per DLH | 3 DLH | 24 | |||||
Variable overhead | $8 per DLH | 3 DLH | 24 | |||||
Fixed overhead | $5 per DLH | 3 DLH | 15 | |||||
$175 |
During the month of September, the company produced 22,800 of the 25,600 pumps that had been scheduled for production in the budget. The company used 416,600 pounds of material during September. The direct labor payroll for the month was $675,540 for 75,060 direct labor hours. Variable overhead costs were $588,980; fixed overhead costs were $426,500. The companys purchasing agent signed a new supply contract that resulted in purchases of 498,000 pounds of direct materials at a price of $3,286,800. (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. | enter an account title to record the purchase of material | enter a debit amount | enter a credit amount |
enter an account title to record the purchase of material | enter a debit amount | enter a credit amount | |
enter an account title to record the purchase of material | enter a debit amount | enter a credit amount | |
(To record the purchase of material) | |||
2. | enter an account title to record the use of material | enter a debit amount | enter a credit amount |
enter an account title to record the use of material | enter a debit amount | enter a credit amount | |
enter an account title to record the use of material | enter a debit amount | enter a credit amount | |
(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 |
---|---|---|
enter an account title to record direct labor | enter a debit amount | enter a credit amount |
enter an account title to record direct labor | enter a debit amount | enter a credit amount |
enter an account title to record direct labor | enter a debit amount | enter a credit amount |
enter an account title to record direct labor | enter a debit amount | enter a credit amount |
(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 |
---|---|---|
enter an account title to record actual variable manufacturing overhead | enter a debit amount | enter a credit amount |
enter an account title to record actual variable manufacturing overhead | enter a debit amount | enter a credit amount |
(To record actual variable manufacturing overhead) |
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