Deporte Company produces single-colored t-shirts. Materials for the shirts are dyed in large vats. After dying the materials for a given color, the vats must be cleaned and prepared for the next batch of materials to be colored. The following standards for changeover for a given batch have been established: 1 Direct materials (2.4 lbs. @ $0.95) $2.28 2 Direct labor (0.75 hr. @ $7.40) 5.55 3 Standard prime cost $7.83 During the year, 79,500 pounds of material were purchased and used for the changeover activity. There were 30,000 batches produced, with the following actual prime costs: Direct materials $ 63,000 Direct labor (for 22,450 hrs.) $163,385 Required: 1. Prepare a journal entry on Dec. 31 for the purchase of raw materials. Record the transaction as a compound entry. 2. Prepare a journal entry on Dec. 31 for the issuance of raw materials. Record the transaction as a compound entry. 3. Prepare a journal entry on Dec. 31 for the addition of labor to Work in Process. Record the transaction as a compound entry. 4. Prepare a journal entry on Dec. 31 for the closing of variances to Cost of Goods Sold. Record the transaction as a compound entry.
Deporte Company produces single-colored t-shirts. Materials for the shirts are dyed in large vats. After dying the materials for a given color, the vats must be cleaned and prepared for the next batch of materials to be colored. The following standards for changeover for a given batch have been established: 1 Direct materials (2.4 lbs. @ $0.95) $2.28 2 Direct labor (0.75 hr. @ $7.40) 5.55 3 Standard prime cost $7.83 During the year, 79,500 pounds of material were purchased and used for the changeover activity. There were 30,000 batches produced, with the following actual prime costs: Direct materials $ 63,000 Direct labor (for 22,450 hrs.) $163,385 Required: 1. Prepare a journal entry on Dec. 31 for the purchase of raw materials. Record the transaction as a compound entry. 2. Prepare a journal entry on Dec. 31 for the issuance of raw materials. Record the transaction as a compound entry. 3. Prepare a journal entry on Dec. 31 for the addition of labor to Work in Process. Record the transaction as a compound entry. 4. Prepare a journal entry on Dec. 31 for the closing of variances to Cost of Goods Sold. Record the transaction as a compound entry.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Deporte Company produces single-colored t-shirts. Materials for the shirts are dyed in large vats. After dying the materials for a given color, the vats must be cleaned and prepared for the next batch of materials to be colored. The following standards for changeover for a given batch have been established:
|
1
|
Direct materials (2.4 lbs. @ $0.95)
|
$2.28
|
|
2
|
Direct labor (0.75 hr. @ $7.40)
|
5.55
|
|
3
|
|
$7.83
|
During the year, 79,500 pounds of material were purchased and used for the changeover activity. There were 30,000 batches produced, with the following actual prime costs:
| Direct materials | $ 63,000 |
| Direct labor (for 22,450 hrs.) | $163,385 |
| Required: | |
| 1. | Prepare a |
| 2. | Prepare a journal entry on Dec. 31 for the issuance of raw materials. Record the transaction as a compound entry. |
| 3. | Prepare a journal entry on Dec. 31 for the addition of labor to Work in Process. Record the transaction as a compound entry. |
| 4. | Prepare a journal entry on Dec. 31 for the closing of variances to Cost of Goods Sold. Record the transaction as a compound entry. |
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