Company uses a standard cost system and reports the following information for 2018: Standards: 3 yards of cloth per unit at $1.20 per yard 2 direct labor hours per unit at $10.25 per hour Overhead allocated at $3.00 per direct labor hour Actual: 2,800 yards of cloth were purchased at $1.25 per yard Employees worked 1,100 hours and were paid $9.75 per hour Actual variable overhead was $2,300 Actual fixed overhead was $1,600 Hayesville Company reported the following variances: Direct materials cost variance $140 U Direct materials efficiency variance 240 F Direct labor cost variance 550 F Direct labor efficiency variance 9,225 F Variable overhead cost variance 1,200 U Variable overhead efficiency variance 1,200 F Fixed overhead cost variance 800 U Fixed overhead volume variance 2,900 F Hayesville produced 1,000 units of finished product in 2018. Record the journal entries to record direct materials, direct labor, variable overhead, and fixed overhead, assuming all expenditures were on account and there were no beginning or ending balances in the inventory accounts (all materials purchased were used in production, and all goods produced were sold). Record the journal entries to record the transfer to Finished Goods Inventory and Cost of Goods Sold (omit the journal entry for Sales Revenue). Adjust the Manufacturing Overhead account. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)
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.
Company uses a
|
Standards: |
|
3 yards of cloth per unit at $1.20 per yard |
|
2 direct labor hours per unit at $10.25 per hour |
|
|
|
Actual: |
|
2,800 yards of cloth were purchased at $1.25 per yard |
|
Employees worked 1,100 hours and were paid $9.75 per hour |
|
Actual variable overhead was $2,300 |
|
Actual fixed overhead was $1,600 |
Hayesville Company reported the following variances:
|
Direct materials cost variance |
$140 U |
|
Direct materials efficiency variance |
240 F |
|
Direct labor cost variance |
550 F |
|
Direct labor efficiency variance |
9,225 F |
|
Variable overhead cost variance |
1,200 U |
|
Variable overhead efficiency variance |
1,200 F |
|
Fixed overhead cost variance |
800 U |
|
Fixed overhead volume variance |
2,900 F |
Hayesville produced 1,000 units of finished product in 2018.
Record the journal entries to record direct materials, direct labor, variable overhead, and fixed overhead, assuming all expenditures were on account and there were no beginning or ending balances in the inventory accounts (all materials purchased were used in production, and all goods produced were sold). Record the journal entries to record the transfer to Finished Goods Inventory and Cost of Goods Sold (omit the
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
