Dash Company adopted a standard costing system several years ago. The standard costs for the prime costs (i.e., direct materials and direct labor) of its single product are:     Material (5 kilograms × $5.00 per kilogram) $ 25.00   Labor (6 hours × $19.50 per hour)   117.00       All materials are added at the beginning of processing. The following data were taken from the company’s records for November:           In-process beginning inventory     None In-process ending inventory   800 units, 70% complete as to direct labor Units completed   6,400 units Budgeted output   6,800 units Purchases of materials   58,000 kilograms Total actual direct labor costs $ 750,000   Actual direct labor hours   41,000 hours Materials usage variance $ 2,300 Unfavorable Total materials variance $ 850 Unfavorable     Required: 1. Compute for November: a. The direct labor efficiency variance. Is this variance favorable (F) or unfavorable (U)?  b. The direct labor rate variance. Is this variance favorable (F) or unfavorable (U)?  c. The actual number of kilograms of material used in the production process during the month. d. The actual price paid per kilogram of material during the month, the company calculates the direct materials price variance at point of purchase. e. The amount of direct materials cost and direct labor cost transferred to the Finished Goods Inventory account. f. The total amount of direct materials cost and direct labor cost in the Work-in-Process Inventory account at the end of the month. 2. Prepare journal entries to record all transactions, including the variances in requirement 1. How do you get the answer?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Dash Company adopted a standard costing system several years ago. The standard costs for the prime costs (i.e., direct materials and direct labor) of its single product are:

 

 
Material (5 kilograms × $5.00 per kilogram) $ 25.00  
Labor (6 hours × $19.50 per hour)   117.00  
 

 

All materials are added at the beginning of processing. The following data were taken from the company’s records for November:

 

       
In-process beginning inventory     None
In-process ending inventory   800 units, 70% complete as to direct labor
Units completed   6,400 units
Budgeted output   6,800 units
Purchases of materials   58,000 kilograms
Total actual direct labor costs $ 750,000  
Actual direct labor hours   41,000 hours
Materials usage variance $ 2,300 Unfavorable
Total materials variance $ 850 Unfavorable
 

 

Required:

1. Compute for November:

a. The direct labor efficiency variance. Is this variance favorable (F) or unfavorable (U)? 

b. The direct labor rate variance. Is this variance favorable (F) or unfavorable (U)? 

c. The actual number of kilograms of material used in the production process during the month.

d. The actual price paid per kilogram of material during the month, the company calculates the direct materials price variance at point of purchase.

e. The amount of direct materials cost and direct labor cost transferred to the Finished Goods Inventory account.

f. The total amount of direct materials cost and direct labor cost in the Work-in-Process Inventory account at the end of the month.

2. Prepare journal entries to record all transactions, including the variances in requirement 1.

How do you get the answer?

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