B Company, which began operations on January 1 of the current year, reported the following information: Estimated manufacturing overhead $600,000 Actual manufacturing overhead 639,000 Estimated direct labor cost 480,000 Actual direct labor cost 500,000 Actual direct materials used 755,000 Total credits in the Finished Goods account 920,000 B Company uses a normal cost system and applies manufacturing overhead to jobs on the basis of direct labor cost. A 60% markup is added to the cost of completed production when finished goods are sold. On December 31, job no. 18 was the only job that remained in production. That job had direct-material and direct-labor charges of $16,500 and $36,000, respectively. Required: a) Prepare entry to assign direct labor and direct materials to the job b) Determine the company's predetermined overhead rate. Prepare journal entry to record applied overhead c) Determine the amount of under- or overapplied overhead. d) Prepare the adjusting entry for the under- or overapplied overhead e) Prepare the journal entries needed to record B Company's sales, which are all made on account.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
B Company, which began operations on January 1 of the current year, reported the following information:
Estimated manufacturing
Actual manufacturing overhead 639,000
Estimated direct labor cost 480,000
Actual direct labor cost 500,000
Actual direct materials used 755,000
Total credits in the Finished Goods account 920,000
B Company uses a normal cost system and applies manufacturing overhead to jobs on the basis of direct
labor cost. A 60% markup is added to the cost of completed production when finished goods are sold. On
December 31, job no. 18 was the only job that remained in production. That job had direct-material and
direct-labor charges of $16,500 and $36,000, respectively.
Required: a) Prepare entry to assign direct labor and direct materials to the job
b) Determine the company's predetermined overhead rate. Prepare
record applied overhead
c) Determine the amount of under- or overapplied overhead.
d) Prepare the
e) Prepare the journal entries needed to record B Company's sales, which are all
made on account.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 2 images
