Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Slick Corporation is a small producer of synthetic motor oil. During May, the company produced 5,000 cases of lubricant. Each case contains 12 quarts of

Slick Corporation is a small producer of synthetic motor oil. During May, the company produced 5,000 cases of lubricant. Each case contains 12 quarts of synthetic oil. To achieve this level of production, Slick purchased and used 16,500 gallons of direct materials at a cost of $20,011. It also incurred average direct labor costs of $13 per hour for the 3,935 hours worked in May by its production personnel. Manufacturing overhead for the month totaled $9,116, of which $2,200 was considered fixed. Slick's standard cost information for each case of synthetic motor oil is as follows.

Direct materials standard price $ 1.30 per gallon
Standard quantity allowed per case 3.25 gallons
Direct labor standard rate $ 16 per hour
Standard hours allowed per case 0.75 direct labor hours
Fixed overhead budgeted $ 2,600 per month
Normal level of production 5,200 cases per month
Variable overhead application rate $ 1.50 per case
Fixed overhead application rate ($2,600 5,200 cases) 0.50 per case
Total overhead application rate $ 2.00 per case

Required:

a. Compute the materials price and quantity variances.

b. Compute the labor rate and efficiency variances.

c. Compute the manufacturing overhead spending and volume variances.

d. Prepare the journal entries to:

1. Charge materials (at standard) to Work in Process.

2. Charge direct labor (at standard) to Work in Process.

3. Charge manufacturing overhead (at standard) to Work in Process.

4. Transfer the cost of the 5,000 cases of synthetic motor oil produced in May to Finished Goods.

5. Close any over- or underapplied overhead to cost of goods sold.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing ISO Management System

Authors: Dr. RAMESH R LAKHE, Dr. RAKESH L. SHRIVASTAVA, M M NAVEED, KRANTI P DHARKAR, Dr. C M SEDANI

1st Edition

1702203913, 978-1702203913

More Books

Students also viewed these Accounting questions

Question

What is the meaning and definition of banks?

Answered: 1 week ago

Question

Brief the importance of span of control and its concepts.

Answered: 1 week ago

Question

What is meant by decentralisation?

Answered: 1 week ago

Question

7. Identify six intercultural communication dialectics.

Answered: 1 week ago