Question:
Making journal entries
Assume that during the month of April the production report of Austin Adhesives, Inc., revealed the following information:
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Units produced during the month
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21,000
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Direct labor hours for the month
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41,000
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Materials purchased (in pounds)
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130,000
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Materials used (in pounds)
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125,000
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Labor rate per hour
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$10.04
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Materials cost per pound
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$1.98
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Make journal entries to charge materials (use the materials purchase price variance) and labor to Work in Process. (Remember to retrieve the standard costs from E8-10 before solving this exercise.)
Preparing a standard cost summary and making journal entries:
the normal capacity of Austin Adhesives, Inc., is 40,000 direct labor hours and 20,000 units per month. A finished unit requires 6 pounds of materials at an estimated cost of $2 per pound. The estimated cost of labor is $10.00 per hour. The plant estimates' that overhead for a month will be $40,000. During the month of March, the plant totaled 34,800 direct labor hours at an average rate of $9.50 an hour. The plant produced 18,000 units, using 105,000 pounds of materials at a cost of $2.04 per pound.
1. Prepare a standard cost summary showing the standard unit cost.
2. Make journal entries to charge materials and labor to Work in Process.